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Sunoco, Carlyle Close in on Philly Refinery Deal

Financial sponsor Carlyle Group is closing in on a deal to purchase a large Sunoco oil refinery in Philadelphia, according to three people familiar with the matter, in a transaction that could be completed in a matter of days, one of these people said.

Carlyle , the Washington-based private-equity firm that recently went public, has been in exclusive talks with Sunoco since mid-April to purchase the 330,000-barrel-per-day refinery. Nicknamed SunPhilly, the plant was set to be idled in August if Sunoco couldn’t find a buyer, a move that would put 800 people out of work.

The exclusivity deal Sunoco and Carlyle inked in April is set to expire Friday, June 15, if a deal can’t be reached, said one of the people familiar with the matter. It is unclear whether the two companies will be able to finalize a transaction before then.

Carlyle executives spent Wednesday holed up in meetings at Sunoco’s Philadelphia headquarters, two of the people familiar with the matter said, hoping to come to final terms. (Extending the exclusivity agreement is also an option, added one of these people.)

Carlyle’s potential deal would come a month and a half after Delta Air Lines — marking a first for an airline looking to save money on jet fuel — bought a smaller refinery in Trainer, Penn., for $180 million. As part of that deal, the state of Pennsylvania kicked in $30 million in subsidies in an effort to preserve local jobs.

If Carlyle does buy SunPhilly, the plant will likely come on the cheap, said one of the people familiar with the matter. Carlyle said in an April statement that it would contribute cash to the refinery as part of a joint-venture arrangement in which Sunoco would retain a minority, non-operating stake in the facility. Carlyle would oversee day-to-day operations, and would be responsible for finding parties to secure crude oil from overseas, ship it to the East Coast, and manage the refining process.

—By CNBC’s Kate Kelly

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