The first transaction is the sale of its Coastal Unilube assets to an affiliate of Warren Oil Company, Inc. for approximately $34 million, consisting of both cash and a note payable. The transaction, which closed December 30, 2003, includes the lubricant blending and packaging facility located in West Memphis, Arkansas, and related inventory. The facility has an estimated annual production capacity of 117 million gallons of lubricants and automotive performance products. El Paso will also receive approximately $45 million from related working capital reductions.
The company also sold its 50-percent interest in a Philippine petroleum sales and marketing joint venture, as well as its rights in the Subic terminal and Clark pipeline asset leases it held with the Philippine Government. The total value of the transaction is $77 million, which includes $35 million in proceeds for the 50-percent interest in the joint venture, the rights to the terminal and pipeline leases, and the release of a $42 million guarantee. The Philippine business comprised of marketing, trading, storage, and distribution of petroleum products within the Philippines. The sales and marketing transaction closed on December 30, 2003, and the assets transaction is expected to close by January 15, 2004.
These sales support El Paso's recently announced long-range plan to reduce the company's total debt to approximately $15 billion by year-end 2005. This will be achieved primarily through $3.3 billion to $3.9 billion of additional asset sales, the sale of restructured power contracts, the recovery of $500 million to $600 million in working capital, the conversion of the company's 9.00-percent equity security units ($575 million), free cash flow generation, and actions already taken in the fourth quarter of 2003.
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