The Carlyle Group L.P., global asset manager and Sunoco Inc. have agreed to form a joint venture Philadelphia Energy Solutions, that will enable the historic Philadelphia refinery to continue to operate. The oldest continuously operating refinery on the east coast of the United States was scheduled to be shut down in August of this year and processes 330,000 barrels of oil per day into refined products. The forming of the joint venture is expected to preserve 850 jobs, create 100-200 news permanent positions, thousands of construction jobs and will secure the fuel supply in the region by continuing the 10 million gallon daily flow of various fuels.
Subject to customary closing conditions, the transaction capital investment will come from the Carlyle Equity Opportunity Fund and the Carlyle Energy Mezzanine Opportunities Fund and JPMorgan Chase will provide working capital financing for intermediate products owned by the refinery in the form of an asset-backed loan subject to documentation. Sunoco will contribute its refinery assets to the joint venture in exchange for a non-operating minority interest. Carlyle will hold the majority interest and oversee daily operations. Phil Rinaldi will serve as CEO of Philadelphia Energy Solutions.
David Marchick, Carlyle’s Managing Director for External Affairs, said, “Saving this vital facility was only possible as a result of the extraordinary leadership and laser-like focus of a number of stakeholders, including the White House; Governor Tom Corbett and his team; Congressman Robert Brady; Mayor Michael Nutter; and USW President Leo Gerard. Each of these parties played an instrumental role in ensuring that the refinery remains in operation, serving businesses and consumers in the Northeast, as it has for more than 140 years.”