Announcement of Agreement to Sell CITGO Asphalt Assets Marks Culmination of Year-Long Process
Nov 13, 2007
The board directed CITGO to determine what value could be gained from the sale of the asphalt assets. Subsequently, CITGO hired UBS Investment Bank to help with the process and 20 companies were identified as being potential buyers.
UBS asked these companies for “open auction” preliminary bids which did not have any restrictions. A total of 13 companies responded with initial bids.
As a continuation of the valuation process, CITGO sent more information, under confidentiality agreements to 12 of these companies and CARCO management made presentations to these companies.
In April, six companies provided notice of their continued interest in pursuing a purchase of the CARCO assets. These indications were non-binding and detailed what the bidders were willing to pay for the assets.
CITGO then selected the final four companies based on the highest amounts and opened a data room for their use in reviewing sample contracts and thousands of documents related to the assets. These companies also were allowed visit the sites.
At the end of June, CITGO received the final, binding bids from three of the companies. At the same time, these three companies entered into negotiations with PDVSA about contracts to purchase 110,000 barrels per day (bpd) of Boscán and Bachaquero crude from PDVSA and to sell between seven and nine million tons of finished asphalt per year in the United States. At no time was any bidder granted exclusivity in the bidding process.
Although CITGO has signed an agreement to sell the CARCO assets to NuStar, successful completion of the two contracts with PDVSA regarding crude supply and asphalt sales is a condition of closing.
CITGO, based in
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