Home › Forums › Coking › News: DCU, Upgrader › 1.Coker (registered users only) › Alon/Paramount buyer FlyJ/Big West Bakersfield coking refinery › RE: Update – FlyJ sale Bakersfield Ref to Alon, New Coker scrapped – merger FlyJ-Pilot
Ogden-based Flying J sells California refinery to Alon
By James Thalman
Deseret News Published: Wednesday, June 2, 2010 7:26 p.m. MDT
OGDEN – Flying J Inc. has taken another step toward fulfilling its Chapter 11 bankruptcy obligations by selling a refinery in Bakersfield, Calif.
The deal with Israeli-owned refining and fuel retailing company Alon Energy USA, in the works since July, will allow Flying J to focus on its national network full-service fuel stops, its financial services company and its North Salt Lake refinery.
Flying J bought the California refinery from Shell Oil Co. in March 2005. In December 2008, Flying J Inc. and its Big West refining and Longhorn Pipeline subsidiaries filed to reorganize under Chapter 11 bankruptcy, indirectly forcing it to stop refining operations in Bakersfield early last year.
The $40 million purchase price includes basically all assets and existing inventory, according to Alon’s statement announcing the deal Wednesday.
Details of the purchase outlined out by Alon to the Bakersfield Californian newspaper indicate the plant will refine leftover oil from its Los Angeles County operation into mainly gasoline and diesel, with plans to begin piping in the crude in about a year.
An expensive, controversial expansion of the refinery that Flying J had planned pre-bankruptcy, intended to increase the plant’s efficiency, will not be pursued, an Alon spokesman told the newspaper, noting that doing so would have meant the refinery would stop buying crude oil from local companies.
Jeff Morris, a spokesman for Alon, said Wednesday that the Bakersfield plant would extend employment offers to the refinery’s existing work force but that there were no immediate plans to rehire any of the roughly 175 workers let go last year.
“Our acquisition of Bakersfield will allow us to potentially save up to 100 jobs in the Bakersfield area once the refinery has recommenced full operations,” Morris said.
The deal is not only attractive, it avoids hundreds of millions of dollars in anticipated new upgrading costs “and will enable us to operate it as an integrated unit with our Paramount refinery, allowing us to significantly increase output at our California refineries,” he said. “Additionally, we were able to accomplish the acquisition of substantially all of the assets of Big West without incurring additional debt to Alon or its subsidiaries.”
Still pending in Flying J’s reorganization is a merger with Tennessee-based Pilot Travel Centers, a step that is designed to help that part of Flying J’s business move more quickly out of Chapter 11.
According to court filings, Flying J will receive a stake in Pilot plus $300 million to $500 million in cash. The equity portion of the deal will be based on an enterprise value for Pilot of $3.3 billion and for Flying J of $1.2 billion.
Pilot has agreed to provide $100 million in “debtor-in-possession” financing for Flying J’s operations, “subject to court approval and various conditions.”
Flying J, with about 270 travel plazas nationwide, and Pilot with 300 locations, are individually among the largest privately held truck stops in the country.Email: email@example.com