SAN ANTONIO -- The Valero Energy Corp., aiming at tax advantages and future profitability, acquired the remaining 50 percent of a Corpus Christi refinery that lost almost $50 million in the first half of 1984, the company said Monday.
The acquisition gives Valero a 100 percent interest in Saber Energy Inc. of Houston, whose major asset was a state of the art gasoline refinery in Corpus Christi. Valero made its initial investment in April 1981, two years before the refinery was completed.
Valero spokesman Mike Long said the refinery, which suffered from mechanical problems and high feedstock prices, lost about $46 million this year, including $26.5 million from Valero.
The acquisition was made to give the company tax advantages on the refinery's losses and because the refinery will eventually become profitable, he said.
The acquisition calls for Valero to purchase the existing promissory notes held by Saber's former shareholders. However, those shareholders retain the right to earn additional consideration if the margins between feedstock prices and refined product prices improve significantly in the next 15 months.
Former Saber shareholders also retain the right to receive an additional payment of up to $53 million if there is a change in Valero's control prior to January 1986, Long said.
Bank credit amendments for both companies were amended to provide for the consolidation.
Bill Greehey, Valero's chairman of the board and chief executive officer, said the acquisition gives Valero complete control of Saber and enables the company to recognize tax benefits from the refinery's losses.
'We remain confident that the amended bank agreements and cash flow from our own operation will provide adequate support for Saber until margins return to profitable levels,' he said.
The bank credit amendments provide for an extension of maturity deferrals of scheduled credit line reductions and reductions in scheduled principle payments. The amedments allow retention of $134 million of bank line credit availability previously scheduled for reduction.
The company also agreed to eliminate common stock dividends until a debt to capitalization ratio of 60 percent has been achieved and to place limitations on capital expenditures.