In February the Joint Administrators of PRML (Petroplus Refining and Marketing Limited [in administration]) announced that they had entered into an arrangement which allowed operations to continue at the Coryton refinery whilst various restructuring and sale options were explored. Since that date work has been ongoing to either sell the refinery as a going concern or to refinance its operations.
Regretfully, despite this extensive exercise over the past 4 months it has not yet been possible to find a solution which sees the refinery continue as a going concern. The current economic environment, the challenge of raising $1 billion (GBP625m) of funding for the refinery, including the $150m capital expenditure 'turnaround' project ultimately proved prohibitive in the face of an over supplied European refinery market for both buyers and investors.
Administrators on Monday met with staff and contractors on site to explain the position. The Administrators will now consult with both the trade union and the established staff representative group. Contractors will also be invited to a series of briefing meetings.
There are likely to be a substantial number of redundancies from within the 500 strong workforce over the next few months if operations are wound down. Contractors will be provided with further clarity on their position in the next few days. The Administrators have suspended all work connected with the refinery turnaround programme immediately.
There are likely to be a number of individuals impacted by this decision at both Swansea and Teesside.
Steven Pearson, Joint Administrator and partner with PwC, commented:
"Together with the PRML management and the PRML creditors' committee, we have worked tirelessly to explore all feasible options for the refinery. We have had contact with over 100 possible investors and purchasers. We have been unable to reach a deal to date.
"The current financing market is exceptionally difficult -- capital is short and expensive. Prospective investors in the refinery faced a significant capital expenditure need, as well as a fragile market for refined oil products. These factors have conspired against us in trying to structure a deal.
"I would like to thank the management, the employees, contractors, customers and suppliers for their support and solidarity during the past four months. Without their commitment we would not have been afforded the opportunity to continue the business and explore a going concern solution."
Any closure process is likely to take up to three months, during which time discussions regarding a possible sale will continue.
Since their appointment on 24 January 2012, the operations at Coryton have continued and some 20 million barrels of oil have been refined.