Castle Energy Corp. Sells Indian Refinery to CORE Refining Corp.

Castle Energy Corp., a Radnor, Pa.-based oil and gas company, has entered into an agreement to sell its 86,000 barrels per day (B/D) Indian Refinery to CORE Refining Corp., a company formed by William S. Sudhaus, a director and the president of Castle Energy. The sale, which is contingent on various conditions, including regulatory approvals and financing, marks a significant development in the company's efforts to divest its refinery assets. The Indian Refinery, located in Lawrenceville, Ill., will be acquired by CORE on an "as is, where is" basis, with the company assuming all environmental and certain other liabilities related to the refinery.

Key Takeaways:

• Castle Energy Corp. has agreed to sell its 86,000 B/D Indian Refinery to CORE Refining Corp. for an undisclosed amount, contingent on various conditions.
• The sale includes the transfer of all assets and liabilities related to the Indian Refinery, including environmental and other liabilities.
• CORE Refining Corp. will pay Castle Energy an adjusted working capital of approximately $23 million as of March 31, as well as a $5.5 million subordinated promissory note and an additional $16.5 million in cash.
• CORE will assume all environmental and certain other liabilities related to the Indian Refinery, including a royalty of up to $20 million based on deliveries of Caroline condensate by Shell Canada Ltd. and its affiliates.
• Castle Energy's obligations under the agreement are subject to various conditions, including the approval of the company's stockholders, receipt of a fairness opinion, and regulatory approvals.
• The interim credit facility, which will provide up to $30 million for the operations of the Indian Refinery, will be repaid in full by the lenders on demand, or on August 31, or the day of closing under the CORE agreement.
• Castle Energy is currently holding discussions with several parties to sell its Powerine Refinery and has announced plans to close both refineries unless sold prior to September 30.

Statistics:

• 86,000 barrels per day: Capacity of the Indian Refinery
• $23 million: Adjusted working capital of the Indian Refinery as of March 31
• $5.5 million: Subordinated promissory note to be paid by CORE Refining Corp. at closing
• $16.5 million: Cash payment to be made by CORE Refining Corp. at closing
• $30 million: Interim credit facility to provide up to $30 million for the operations of the Indian Refinery
• 450: Number of oil and gas wells operated nationwide by Castle Energy
• 77 miles: Length of the interstate pipeline in Rusk County, Texas, owned by Castle Energy
• August 31: Date by which all indebtedness under the interim credit facility must be repaid
• September 30: Date by which both refineries will be closed unless sold

Sources:

• Castle Energy Corp. press release, May 30, 1995
• Business Wire, May 30, 1995