Sunoco Inc. (SUN) plans to move ahead with the separation of its coking business after settling a lawsuit with customer ArcelorMittal (MT) regarding pricing at one of its facilities.
Sunoco announced plans in June to separate its coking business, which was a fast-growing, lucrative gem at a time when Sunoco has struggled with its core refining assets. The move is expected to allow Sunoco to focus on expanding its fuel logistics, retail and marketing operations.
The settlement, retroactive to Jan. 1, includes the renegotiation of the Virginia plant contract, among other things. The settlement also extends so-called take or pay agreements, expected to change in October 2012, at its Virginia and Ohio plants through 2020, providing the coking business with a guaranteed customer.
Sunoco expects the settlement to reduce 2012 earnings before interest, taxes, depreciation and amortization by about $60 million and it withdrew its prior SunCoke guidance.
Frederick A. "Fritz" Henderson, who will serve as chairman and chief executive of SunCoke Energy upon its separation from Sunoco, said, "The settlement is an important step in resolving a dispute with our largest customer."
Henderson is former CEO of General Motors Co. (GM), where he helped the company expand its operations in South Korea and China before being appointed to head the European division in 2004. He was named chief financial officer and vice chairman in 2006 and elevated to the top executive spot in 2009.
The second-largest independent refiner behind Valero Energy Corp. (VLO) in October reported that it swung to the black in its third quarter, the second-straight period of profit as refiners recover slowly from a recession that hit them hard.
Shares closed Friday at $43.46 and were inactive premarket.
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