By Ross Kelly
SYDNEY-- Chevron Corp. plans to sell its stake in an Australian
oil-refining business for about $3.60 billion, as the U.S. oil
company sheds assets to buffer its balance sheet from tumbling oil
prices.
Chevron said Friday it entered into an underwriting agreement to
sell its 50% interest in Caltex Australia Ltd., which owns an oil
refinery in Brisbane and around 1,800 gas stations spread across
the country.
Goldman Sachs is underwriting the deal and has set a floor price
on the stake sale of 34.20 Australian dollars (US$26.65) per share,
according to a person familiar with the matter. The floor price
represents a 9.7% discount to Caltex's closing price on Friday of
A$37.88.
Companies trying to sell large blocks of shares on the stock
market typically offer a discount to get the trade away.
The biggest U.S. oil company behind Exxon Mobil Corp. in terms
of production said it intended to sell its Caltex shares to a range
of institutional investors. At the close of trade in Sydney on
Friday, Caltex had a market capitalization of A$10.22 billion.
"This transaction reflects Chevron's commitment to regularly
review our portfolio and generate cash to support our long-term
priorities," Michael Wirth, executive vice president of the
company's downstream and chemicals business, said in a statement.
"It is aligned with our previously announced asset sales
commitment."
Earlier this month, Chevron raised its target for asset sale
proceeds to US$15 billion between 2014 and 2017, up from its
previous guidance of US$10 billion.
The San Ramon, Calif., company in January reported a 30%
year-over-year slide in profit for the last three months of 2014 to
$3.5 billion, its lowest since the 2009 recession. Chevron said at
the time it would trim spending and stop buying back its shares as
the collapse in oil prices wiped billions of dollars from its cash
flow.
Caltex Australia shares have more than tripled in the past five
years, rallying 74% in the past 12 months alone, as the company
moved away from volatile fuel refining and focused more on its more
lucrative fuel marketing business.
Last year, Caltex closed its Kurnell refinery in Sydney and
converted it into a fuel import terminal. It still operates the
Lytton refinery in Brisbane.
Write to Ross Kelly at ross.kelly@wsj.com
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