Apollo circles Stanlow refinery owner Essar amid cash crunch – report
Private equity giant Apollo Global Management is in talks with the owners of the struggling Stanlow oil refinery over a £400m refinancing deal, it was revealed today.
Sky News reported that Apollo had had been in talks with Essar UK for several weeks over a deal that would involve it taking a significant position in the company’s capital structure.
However, a source close to the investment group told Sky that a deal was far from certain. A spokesperson for Essar declined to comment on specific names, saying instead that the firm was speaking to multiple finance providers.
However, it said it was “confident” that it would put in place “an optimal financing solution” for the company.
The news comes with representatives for the firm this week in negotiations with government officials after it emerged the plant was close to collapse.
A source close to Essar told CityAM that talks with HMRC over a potential deferral of tax revenues paid on the sales of the refinery’s products were “constructive”.
They added that such a deal would help keep the refinery running until demand for fuel began to rise again.
At the same time, the company confirmed that it was “confident” it would agree a new deal with private financiers after its arrangement with Lloyds collapse.
A covenant waiver agreed with the lender expired at the end of March, triggering the search for new funding, after Lloyds reportedly grew frustrated with Essar UK’s governance.
The Stanlow plant, which is near Ellesmere Port, provides about 16 per cent of the UK’s transport fuel. The site directly employs more than 900 people, with an additional 800 on-site contractors and a further 5000 people working indirectly within the extended value chain.
A spokesperson for Apollo declined to comment.