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TULSA, Okla. -- Williams Cos. said it has agreed to sell its Tennessee refinery and petroleum inventory to Premcor Inc. for about $465 million cash as part of its effort to improve its finances. The 190,000-barrel-per-day Memphis refinery, which employs about 375 workers, includes three petroleum terminals, supporting pipeline infrastructure and crude oil tanks in St. James, La.
Oil refiner Premcor will pay Williams $315 million for the Memphis refinery and related assets at closing and will buy petroleum inventories worth today about $150 million, Tulsa-based Williams said. The purchase would increase Greenwich, Conn.-based Premcor's oil refining capacity to almost 700,000 barrels per day. The company currently operates refineries in Port Arthur, Texas, and Lima, Ohio.
The deal, expected to close March 31 after regulatory approval and Premcor completes financing, could also bring Williams another $75 million over the next seven years depending on refining margins.
Williams has been selling assets to raise cash and reduce debt as it attempts to recover from a bust in its once-profitable energy trading division, which has been losing money since Enron Corp. collapsed. Credit agencies have downgraded Williams' credit to below investment grade and the company, the nation's second largest pipeline concern, is refocusing on finding, producing and transporting natural gas.