Sunoco Inc., which has promised to shut down its Philadelphia refinery this summer if it is unable to find a buyer, announced Monday that it has entered into exclusive talks with The Carlyle Group, a private-equity manager, about operating the plant as a joint venture.
If a deal were to be consummated, Sunoco would contribute the refinery assets in exchange for a nonoperating minority interest in the joint venture. The Philadelphia company, which has expressed a desire to exit the refining business completely, would have no ongoing capital obligations for the refinery.
The Carlyle Group, which is based in Washington and has $147 billion of assets under management worldwide, would contribute cash to the joint venture, hold the majority interest and oversee day-to-day operations of the facility.
No other financial terms were disclosed and the companies emphasized that a deal is not guaranteed.
"We are working actively with Sunoco and other stakeholders to explore ways to keep this vital facility operating," Rodney S. Cohen, a Carlyle managing director, said in a statement. "The facility has been operating at a significant loss for some time, and we are exploring every avenue to create a viable plan. It is a heavy lift and we are not sure a solution is possible, but we are doing the work."
Sunoco extended its July 1 deadline to shut down the refinery by one month. "If a suitable transaction with Carlyle cannot be completed, the company would proceed with idling the main processing units at the refinery in August 2012," the company said in a news release.
"We believe having a strong partner like Carlyle with a track record of leading successful business turnarounds is necessary to preserve the facility's future," Brian P. MacDonald, Sunoco's chief executive, said in a statement.
The companies' announcement also included a statement of support from Leo W. Gerard, international president of the United Steel Workers, which represents the refinery's workers. Gerard said the union is "more than willing to work with all levels of government and any willing party" in an effort to maintain operations at several Philadelphia refineries threatened with closure because of poor business climate.