Castle Energy announces agreement to sell Indian Refinery.RADNOR, Pa.--(BUSINESS WIRE)--May 30, 1995--Castle Energy Corp.(a) (NASDAQ/NNM:CECX) announced Tuesday that it has entered into an agreement to sell its 86,000 B/D Indian Refinery, located in Lawrenceville, Ill., to CORE Refining Corp., a company formed by William S. Sudhaus, a director and the president of Castle Energy. Castle Energy also announced that it had obtained a $30 million interim credit facility for the Indian Refinery. The initial proceeds of the interim credit facility have been utilized to repay all of the Indian Refinery's remaining indebtedness to Metallgesellschaft Corp. (MG) and its affiliates. The interim credit facility will also provide working capital for the operation of the Indian Refinery pending the closing of the acquisition by CORE. The agreement for the sale of the Indian Refinery provides for CORE to acquire all of the assets of the Indian Refinery on an "as is, where is" basis. CORE will pay to Castle Energy at closing an amount equal to the adjusted working capital, plus certain capital expenditures of the Indian Refinery, payable in the form of a $5.5 million subordinated promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. and the balance in cash. The adjusted working capital of the Indian Refinery equaled approximately $23 million as of March 31. CORE will assume all of the environmental and certain other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Indian Refinery. In addition, CORE will pay Castle Energy over eight years a royalty of up to $20 million based on deliveries of Caroline condensate by Shell Canada Ltd. and its affiliates under an existing long-term supply contract. The payment of the royalty will be contingent on continued performance by Shell Canada under the supply contract, which is currently the subject of certain litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. between Castle Energy and Shell Canada. CORE's obligations under the CORE agreement are subject to a number of conditions, including there being no material adverse change in the operations or financial condition of the Indian Refinery, CORE concluding financing for the transaction, and receipt of certain regulatory approvals (including clearance under the Hart-Scott-Rodino Antitrust Improvements Act The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. ). Corral corral a small fenced-in enclosure with high, wooden fences, suitable for holding cattle or horses. corral system a management system in which range cattle are put into corrals and fed hay for a period when the environment is most Petroleum and Gulf Interstate Oil Co. have placed into escrow $16.5 million to provide the equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. for the transaction. Corral, whose president is Dr. Ghazi gha·zi n. pl. gha·zies Islam 1. A man who has fought successfully against infidels. 2. Often used as a title for such a warrior. M. Habib, is owned by a prominent Saudi businessman, Mohammed Al-Amoudi. Corral also owns OK Petroleum Co., the largest oil company in Sweden. Gulf Interstate, headquartered in Dubai, and represented by its President, Edward T. Saad, is active in the supply of crude and refined products, in processing and in product distribution. CORE has also obtained a "highly confident" letter for up to $100 million of high-yield debt financing and a commitment letter for a $125 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility from major financial institutions. Castle Energy's obligations under the CORE agreement are also subject to a number of conditions, including approval by Castle Energy's stockholders of the proposed plan to sell Castle Energy's refineries, which approval is being sought at Castle Energy's annual meeting of stockholders to be held on June 5, receipt of a fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. from Lazard Freres & Co. LLP LLP - Lower Layer Protocol with respect to the transaction, CORE receiving its financing, and receipt of regulatory approvals. Under the CORE agreement, Castle Energy may respond to other offers for the Indian Refinery and may accept another offer and terminate the CORE agreement. The CORE agreement provides for Castle Energy to pay CORE's legal and other expenses pending the closing. If the closing occurs, CORE will repay such expenses, including one-half of the expenses incurred by Castle Energy in connection with the Indian Refinery's interim credit facility. Castle Energy's board of directors, based in part on the recommendation of a Special Committee of the board, has approved the CORE agreement. The interim credit facility will provide up to $30 million for letters of credit and other funds for the operations of the Indian Refinery pending the closing of the transaction with CORE. All indebtedness under the facility will be due on demand by the lenders and, in any case, on Aug. 31, or, if earlier, the termination of or closing under the CORE agreement. The interim credit facility has been secured by the pledge of the working capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) for the Indian Refinery. In addition, Castle Energy and two of its subsidiaries engaged in the gas business have guaranteed the interim credit facility and have pledged certain assets as security for such guarantees. Castle Energy owns two refining subsidiaries, Indian Refining Limited Partnership, which owns the Indian Refinery, and Powerine Oil Co., which owns the Powerine Refinery. Castle Energy is currently holding active discussions with several parties to sell the Powerine Refinery. Unless sold, both refineries will be closed prior to Sept. 30. Castle Energy, through various subsidiaries and affiliates, also owns a gas sales contract Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. with Lone Star Gas Co., a 77-mile interstate pipeline in Rusk County, Texas Rusk County is a county located in the U.S. state of Texas. Originally a part of Nacogdoches County, Rusk was established as its own county by the Congress of the Republic of Texas on January 16, 1843. In 2000, its population was 47,372. , and related gas contracts and interests, and operates approximately 450 oil and gas wells nationwide. -0- (a) Castle Energy Corp. is not affiliated with Castle Oil Corp. CONTACT: Castle Energy, Radnor Joseph L. Castle II, 610/995-9400 |
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