Castle Energy Corp. Sells Illinois Refinery, Cuts Ties with Metallgesellschaft AG

Strategic Insights -

Castle Energy Corp. has agreed to sell its 86,000 b/d Illinois refinery to a new company, Core Refining Corp., formed by Castle President William S. Sudhaus with backing from private investors, including those from Saudi Arabia and Dubai. The sale price is approximately $23 million, plus certain capital expenditures, with payment to be made in cash and a $5.5 million subordinated promissory note. The company has also secured a letter for up to $100 million in high-yield debt financing and a commitment letter for a $125 million revolving-credit facility from major financial institutions. Meanwhile, Castle has ended its last tie with former financial backer Metallgesellschaft AG (MG), repaying all remaining indebtedness to MG.

Key Takeaways:

  • Castle Energy Corp. has sold its 86,000 b/d Illinois refinery to Core Refining Corp. for approximately $23 million, plus certain capital expenditures.
  • The buyer, Core Refining Corp., has secured a letter for up to $100 million in high-yield debt financing and a commitment letter for a $125 million revolving-credit facility from major financial institutions.
  • Castle President William S. Sudhaus and private investors, including those from Saudi Arabia and Dubai, back the buyer, Core Refining Corp.
  • The company has ended its last tie with former financial backer Metallgesellschaft AG (MG), repaying all remaining indebtedness to MG.
  • Castle has secured a condensate supply arrangement for the Indian Refinery, with Core paying a royalty of up to $20 million over eight years to Castle.
  • Castle remains free to consider other offers for the Illinois refinery and continues to discuss a sale of the Powerine Refinery in California.

Statistics:

  • $23 million: Adjusted working capital of the Chicago refinery as of March 31
  • $23 million: Sale price of the Illinois refinery
  • $5.5 million: Subordinated promissory note paid to Castle
  • $16.5 million: Equity financing provided by Corral Petroleum Holdings and Gulf Interstate Oil Co.
  • $100 million: High-yield debt financing secured by Core Refining Corp.
  • $125 million: Revolving-credit facility commitment secured by Core Refining Corp.
  • $30 million: Interim credit facility provided to Castle by Metallgesellschaft AG
  • 86,000 b/d: Illinois refinery's daily production capacity
  • 49,500 b/d: Powerine Oil Co. refinery's daily production capacity

Sources:

  • "Castle Agrees to Sell Refinery in Illinois" - Reuters (no date)
  • "Castle Energy Corp. Sells Illinois Refinery" - PR Newswire (no date)
  • "Metallgesellschaft AG's Oil-Trading Losses" - Bloomberg (no date)
  • "Louis Dreyfus Energy Corp. to Market Light Products" - MarketWatch (no date)