Sunoco awaits possible buyer of chemicals unit

Sunoco Inc. will know by the end of the month if it has a buyer for its underperforming chemicals business, chief executive Lynn L. Elsenhans told analysts yesterday.

Elsenhans, who has shaken up the Philadelphia refiner since taking command last year, said several companies had examined the chemicals unit's books and bids are due soon.

"We know what the business is worth to our shareholders and we're not going to sell it for less," she told analysts at the Barclays Capital CEO Energy/Power Conference in New York.

The chemicals unit employs about 1,000 people and makes products such as polypropylene and phenol, used in the production of fibers and resins. Its nine facilities include operations in Frankford and at Sunoco's Marcus Hook refinery.

Elsenhans said the unit had consistently generated cash but had not met targets for return on investment. Last year it contributed $36 million of Sunoco's $776 million in net income, while it employed about 14 percent of its $5.2 billion in capital.

She told analysts Sunoco would invest the sale proceeds in its pipeline operation, Sunoco Logistics Partners L.P., or its coke unit, which manufactures an ingredient in steel.

But the coke business is also a candidate to be sold or spun off, she said, because it "doesn't have a lot of synergies" with Sunoco's other businesses.

Elsenhans announced last year Sunoco was reevaluating its entire portfolio.

It recently announced the $82.5 million sale of its retail heating-oil unit, and earlier this year announced plans to sell 150 fuel stations over the next two years.

She said these were "very challenging times" in refining, and demand for fuel - where profit margins are squeezed - only recently had moved up.

Sunoco's shares closed yesterday at $26.97, up 85 cents, or 3.25 percent.