Sector News

Chevron seeks to exit Caltex Australia with $3.6 billion stake sale

March 27, 2015
(Reuters) – U.S. energy firm Chevron is seeking to sell its entire stake in Caltex Australia Ltd for about A$4.6 billion ($3.6 billion), exiting Australia’s biggest refiner after nearly 40 years as falling oil prices and high costs hurt margins.
A successful sale of Chevron’s 50 percent stake, which the company is offering at a discount to market prices, would make the deal Asia’s largest block transaction after the government of India raised $3.6 billion by selling a stake in Coal India Ltd in January.
Chevron is offering 135 million shares in Caltex at a floor price of A$34.20 each, a 9.7 percent discount to Friday’s close, according to a term sheet of the deal seen by Reuters. Caltex shares have risen 10.7 percent this year, outpacing a 9.4 percent rise in the benchmark Australian share index .AXJO.
A halving in global oil prices since mid-2014 has added to the pressures on Australian refiners, which are grappling with aging equipment, cheaper imports and high costs. Many firms, including Caltex Australia, have closed refiners while others have restructured operations.
Chevron is the latest global major to exit Australia’s refining industry. Last year, Royal Dutch Shell Plc (RDSa.L) sold its Australian petrol station and refinery operations for A$2.9 billion and BP Plc, which shut down its Bulwer Island oil refinery in Queensland, is also selling its Australian bitumen business.
In a statement, a Caltex spokesman said that Chevron had made clear its sale was part of a broader portfolio review.
“There will be no change to our ability to reliably and competitively deliver all our customers’ fuel requirements,” the spokesman added.
Australia has experienced a rush of block trades in the past month as investors look to capitalize on frothy valuations following a share market that is rising on hopes of more rate cuts.
Goldman Sachs is the sole underwriter for the deal, the terms showed.
($1 = 1.2837 Australian dollars)
(Reporting by Denny Thomas; Editing by Miral Fahmy)

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