Equistar Agrees to Supply Propylene to Sunoco for 15 Years and Sell Bayport Polypropylene Unit in Pasadena, Texas
Lyondell Chemical Company announced that its joint venture Equistar Chemicals, LP, is entering into a long-term propylene supply arrangement with Sunoco, Inc. and is selling its Bayport polypropylene manufacturing unit in Pasadena, Texas, to Sunoco, subject to certain conditions. The transaction will be effective as of March 31.
Beginning April 1, 2003, Equistar will supply propylene to Sunoco for a period of 15 years, and a majority of the propylene to be supplied will be provided under a cost-based formula.
Equistar is selling its Bayport polypropylene unit to Sunoco, but will retain ownership of its Bayport low-density polyethylene (LDPE) unit. Sunoco will operate both units. Equistar's Novolen(R)-based polypropylene manufacturing plant in Morris, Illinois, and its interest in the Novolen Technology Holdings venture are not included in the transaction.
The total consideration to Equistar for the supply arrangements and asset sale is approximately $190 million, plus the value of the Bayport polypropylene inventory.
"Equistar is a major producer of propylene and Sunoco is a growing, committed producer of polypropylene," said Dan F. Smith, Lyondell President and CEO and Equistar CEO. "These transactions enable each company to focus on its particular area of expertise. Additionally, the cash received from these transactions will enable Equistar to enhance liquidity, which remains key among our financial priorities."
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