Tesoro Selling Hawaii Refining Operations to Par Petroleum
Independent oil refiner and marketer Tesoro has agreed to sell all of its Tesoro Hawaii assets to a wholly owned subsidiary of Par Petroleum (NASDAQOTCBB: PARR), the companies announced yesterday.
The transaction will cost Par $75 million, plus the market value of Tesoro Hawaii's net working capital -- estimated to be between $225 million to $275 million -- and up to $40 million payable over three years based on consolidated gross margins. The sale, which the companies say should be competed in the third quarter, is subject to regulatory approval, the successful restart of Tesoro Hawaii's refinery, and other closing conditions.
Tesoro Hawaii reported gross 2012 revenue from its refining operations of $174 million on throughput of 68,000 barrels of crude per day. Revenue for the first quarter of 2013 showed $28 million on 67,000 barrels of throughput a day.
"While the Hawaii operations do not align with our strategic focus, we believe they offer a great opportunity for Par Petroleum," Tesoro CEO Greg Goff was quoted as saying. Tesoro told Hawaii state officials in May that it would lay off 165 workers at the Kapolei refinery. Those layoffs were set to begin this week after initial notices were sent out earlier this month.
Par said it will partly finance its acquisition by issuing $200 million of common stock it has valued at $1.39 per share, and it will borrow the rest on a revolving credit basis from Deutsche Bank, Barclays, and the Bank of Hawaii.
-- Material from The Associated Press was used in this report.
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