Suncor begins sale of lubricants business -sources
By Mike Stone
June 16 (Reuters) - Suncor Energy Inc has launched an auction of its Petro-Canada lubricants division, whose white mineral oils are sprayed on gummy bear candy to make it shiny and prevent sticking, people familiar with the matter said.
The sale could fetch around $800 million and help Canada's biggest energy company pay down debt incurred by recent acquisitions, the people said this week.
Calgary, Alberta-based Suncor, which merged with Petro-Canada in 2009, is working with Bank of America Corp on the sale process, said the sources, asking not to be identified because the matter is confidential.
Suncor did not respond to a request for comment and a representative for Bank of America declined to comment.
Petro-Canada is the world's largest manufacturer of white mineral oil, which is used in health and beauty products, pharmaceuticals, adhesives, plastics and elastomers.
Suncor has been actively acquiring companies during the two-year slump in oil prices. It spent C$4.24 billion ($3.32 billion) to purchase Canadian Oil Sands in March. In April, it agreed to pay about C$937 million to buy an additional 5 percent stake in its Syncrude oil sands joint venture from Murphy Oil Corp's Canadian unit.
Petro-Canada purchased its lubricants business in 1985 from Gulf Canada. The unit, based in Mississauga, Ontario, near Toronto, produces more than 350 advanced lubricants for industries ranging from beauty to heavy manufacturing.
Over the last nine months, as the price of crude oil has languished, Suncor has spent about $7 billion (C$9 billion) on acquisitions and development, giving it a production capacity of about 164,000 barrels of oil per day.
Last week, Suncor announced plans to raise about $1.9 billion (C$2.5 billion) in equity by selling 71.5 million of its shares. The offering is expected to close in June 22.
Suncor's competitor Imperial Oil Ltd, Canada's No. 2 integrated oil producer and refiner, raised capital through the sale of 497 Esso gas stations for about C$2.8 billion. (Reporting by Mike Stone in New York; Editing by Richard Chang)
© Thomson Reuters 2017 All rights reserved.