San Antonio-based refiner Tesoro Corp. has found a buyer for its Hawaii refinery.
Houston-based Par Petroleum Corp. will pay Tesoro $75 million, plus working capital of $225 million to $275 million, for the 94,000-barrel-a-day refinery in Kapolei, Hawaii. The deal includes the purchase of retail stores and associated logistics.
Tesoro expects to close on the sale in the third quarter.
Tesoro has long sought a buyer for its Hawaii plant. The company said early this year that it would convert the refinery to a storage and distribution terminal. Layoffs were to begin this week.
“We are pleased to have reached this positive outcome for the company,” Tesoro CEO Greg Goff said in a statement, saying the plant isn’t part of the company’s strategic focus.
Hawaii U.S. Rep. Colleen Hanabusa, D-Hawaii, praised the sale and said she hopes it will help prevent job losses.
“I look forward to learning more about Par Petroleum and their intentions, practices and philosophy,” Hanabusa said. “My hope is that they will grow to be a part of our community.”
Democratic U.S. Sen. Brian Schatz says the operation is a critical part of Hawaii’s economy.
“This will help with the availability of jet fuel, diesel fuel and other refined products,” Schatz said.
Par Petroleum has several energy-related assets. It said its board unanimously approved the purchase.
Par Petroleum said the retail gas stations would remain under the Tesoro brand.
“This is a great fit for Par Petroleum, and we are pleased to make a long-term investment in Hawaii’s economy,” Par Petrolem CEO Will Monteleone said.
The company said the deal would be financed by issuing $200 million in common stock and other funding.
Also Monday, a related company, Tesoro Logistics LP, said it has agreed to sell a terminal in Idaho at the insistence of the Federal Trade Commission, a move that clears the way for Tesoro Logistics’ $355 million acquisition of a pipeline system and related assets.
Tesoro Logistics’ acquisition of pipeline and terminal assets from Chevron Corp.’s Chevron Pipe Line Co. and Northwest Terminalling Co. would be anti-competitive, the FTC said in a statement.
Without the sale of the terminal, the deal would have given Tesoro ownership of two of the three terminals in Boise and “would give Tesoro control over most of the terminal capacity” in the area, leading to reduced competition and higher costs being passed on to consumers, the FTC said.
Tesoro Logistics has agreed to sell the terminal within 180 days to a buyer that the FTC approves.
Tesoro Logistics said it expects the acquisition to close Wednesday. The system it’s buying includes a 760-mile pipeline from Salt Lake City to Spokane, Wash., as well as a jet fuel pipeline to Salt Lake City International Airport.
“We are pleased to have received the FTC’s clearance of the Northwest Products System acquisition,” said Goff, who is also CEO of Tesoro Logistics.
Tesoro Logistics will use proceeds from its $392 million equity offering in January to pay for the acquisition.
Goff estimated that the system will contribute $30 million to $35 million earnings before interest, taxes, depreciation and amortization in the first twelve months of operation.
Tesoro Logistics also expects to invest $15 million to $25 million during the next two years to inspect and repair the pipeline system.
Goff said divesting the Boise terminal isn’t expected to greatly affect earnings before taxes.
The Associated Press contributed to this report.