Sunoco Agrees To Buy New York Biofuels Plant For $8.5 Million
20 Maggio 2009 - 12:02AM
Dow Jones News
Sunoco Inc. (SUN) has agreed to purchase a biofuels plant in
upstate New York for $8.5 million from a company that filed for
bankruptcy protection earlier this year, according to court
documents.
The agreement between the Philadelphia-based oil refiner and
Northeast Biofuels L.P. is subject to court approval.
This is the second deal between a major independent oil refiner
and a financially-troubled ethanol producer. Earlier this year,
Valero Energy Corp. (VLO) bought seven of VeraSun LLC's ethanol
plants for $477 million.
The Northeast Biofuels plant located in Volney, New York, has
the capacity to process 100 million gallons of ethanol a year.
Northeast Biofuels reportedly filed for bankruptcy because the
plant had a design flaw that prevented it from properly
working.
The cost to fix the facility is estimated at $10 million, which
brings Sunoco's investment to about 18.5 cents per gallon of
capacity, according to a bankruptcy consultant familiar with the
matter. Valero bought the Vera Sun plants for 61 cents per gallon
of capacity.
The operational troubles at the Northeast Biofuels plant may
explain why Sunoco was able to get such a low price, refining
analyst Chi Chow wrote in a note to clients Tuesday afternoon.
"Sunoco's actions points further to the US refiners'
acknowledgement that biofuels will represent an increasing,
long-term component of the US refined product pool, and that the
companies are increasingly positioning themselves as providers of
all transportation fuels (not just petroleum-based products) to
remain competitive long-term," Chow said.
(Mara Lemos-Stein in New York contributed to this report)
-By Susan Daker, Dow Jones Newswires; (713) 547-9208;
susan.daker@dowjones.com