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April 7, 2010
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Oil refiner and marketer Sunoco Inc. (SUN) closed the previously announced sale of its polypropylene subsidiary Sunoco Chemicals Inc. to Brazil-based petrochemical and resin producer Braskem S.A. (BAK) for approximately $350 million in cash.
As part of the deal, Sunoco sold polypropylene manufacturing facilities in Marcus Hook, Pennsylvania; La Porte, Texas; and Neal, West Virginia. These plants have a combined annual production capacity of approximately 2.1 billion pounds of polypropylene (a plastic used in packaging, carpets, stationery, lab equipment and automotive parts). The sale also includes a research and technology center in Pittsburgh, Pennsylvania.
The Braskem transaction is part of Sunoco’s strategic action to improve its performance and competitiveness in a cost-effective manner, as the company struggles to cope with the bearish refining margin environment.
Other such steps include the closure of the previously-idled Eagle Point (New Jersey) refinery and cutting its dividend. Early last year, the company sold its Tulsa refinery and Retail Home Heating Oil business. We believe these liquidity enhancements (expected to save more than $300 annually) will help the company improve its financial health, while providing more flexibility to pursue its core business strategy.
Philadelphia, Pennsylvania-based Sunoco is a leading independent refiner and marketer of petroleum products. The company is also a major chemicals manufacturer and has interests in logistics and coke-making facilities. Its operations include three refineries having a combined capacity of 675,000 barrels per day.
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