We do not.
Evidence of meeting #26 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was shell.
A recording is available from Parliament.
Evidence of meeting #26 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was shell.
A recording is available from Parliament.
11:20 a.m.
Conservative
The Chair Conservative Michael Chong
Thank you very much, Mr. Wallace.
We'll now go to Monsieur Godin.
11:20 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
Thank you, Mr. Chairman.
I would like to welcome you all to the committee.
If I am not mistaken, Mr. Boles, you are now saying that you are not interested in buying a company that has shut down or closed its refinery. Is that correct?
11:20 a.m.
Business Development, Delek US Holdings
We don't want to fund the purchase price for a company that has closed its doors. There might be many ways to organize a transaction, but we certainly don't want to put up $150 million and then all we have is somebody standing at the door with a shotgun.
11:20 a.m.
Voices
Ah, ah!
11:20 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
Let's just consider what Shell is now telling us—its serious comments, that is. If Shell wanted to negotiate seriously with you and set a deadline for the closure… There can be no closure. It doesn't want that. It says it wants to supply the Montreal region, Quebec, the East and part of Ontario. So, the refinery cannot shut down; it has to continue to operate.
Is that what you are talking about—in other words, that Shell should continue its operations and that at the same time you move ahead with the transaction or the transfer of the company? Is that right?
11:20 a.m.
Business Development, Delek US Holdings
Let me try to be responsive to what you said.
It's my understanding that Shell has made arrangements for supply to be brought into the country. They have been working on interim supply arrangements for those customers for a while, and that was an issue in the last set of documents that we shared with each other around the transaction. It's my understanding that they have been working to get that in place.
I don't know that they have to be operating to supply the needs. I don't know what they've done. I've heard the questions that were asked and I heard the answers, but the plant could be closed and it could be reopened. You've got to find a way to deal with the employees and take care of them in some form or fashion that's fair to all parties concerned.
11:20 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
I don't know if I understand you well. A little while ago I thought I understood that you didn't want to buy something that is closed and will open in the spring.
11:20 a.m.
Business Development, Delek US Holdings
I don't want to pay the purchase price for something that is closed. That is not a risk I entertained when I decided to start working on this transaction.
11:20 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
You talk about $150 million for the company. But the question is even clearer than that: are you prepared to pay $150 million for the refinery? You use the term “business”. Could you clarify what you mean?
Mr. Fortier, earlier—or you may have said this in another context—you were saying that there was a price range of between $150 million and $200 million for the refinery. Did you have the feeling that this referred to the refinery and the service stations? Because Mr. Boles says that the document also referred to distribution. Can you clarify that?
11:20 a.m.
Chairperson, Follow-Up Committee of Shell Refinery
Yes, I can clarify that. It was $150 million to $200 million for the refinery. When I met with Shell officials, they asked me to make no promises to potential buyers regarding the possibility of the service stations also being for sale, because Shell wanted to deal with that separately at the appropriate time. As far as I was concerned, that was perfectly acceptable.
11:25 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
You say that Shell officials discussed this with you, but did they discuss it with you before you presented them with Delek as a potential buyer?
11:25 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
According to Shell, Delek made that proposal to you. It's as though it just came out of thin air and Shell had never even considered it.
11:25 a.m.
Chairperson, Follow-Up Committee of Shell Refinery
The first time I met with Shell officials, they provided me with a document which stated that the refinery was for sale for between $150 million and $200 million. I asked them about the service stations. They answered that they did not want to mix different types of assets and that they might or might not decide to sell the service stations. They told me my committee should focus on the refinery. I answered that that was fine and that we would focus on the refinery.
As part of the work carried out by Claude and myself, people like Mr. Boles asked what was planned for the service stations. It was at that point that Mr. Boles engaged in discussions with Shell.
11:25 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
I would like some clarification regarding the rumour that approximately $200 million was offered for the refinery and approximately $225 million for the retail stations.
Is that a rumour or is it true?
11:25 a.m.
Business Development, Delek US Holdings
There was never a discussion of a specific dollar amount on the retail stations. There was discussion of a formula upon which a purchase price for those retail locations would be based. We offered, in writing, $150 million. We understood from Shell that they believed there was still a significant gap in value. Our attitude about that was that we'd like to try to find a way to close that gap. We didn't think we could go over $200 million, recognizing that at the time we had no knowledge that there'd been a discussion between them and the committee of a purchase price of $150 million to $200 million. Coincidentally, that sort of...
We said we could go up, but we would want some concessions. We never put that in writing. It was a small discussion in the meeting of June 22 and in a subsequent phone call conversation I had with one of the Shell people working on the transaction, and dependent upon other financial considerations. So this whole discussion of $200 million was what you would commonly find in a negotiation. There's some to-ing and fro-ing around what you would give. Our offer of $150 million for the business, just the refinery business, was an expression of interest, which we would follow through on.
11:25 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
Okay. Then really, do you still want to get into negotiations, and do a real negotiation? A negotiation is not done in 24 hours. It's not done in a month, especially, I think, in a big business like that, right?
11:25 a.m.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
Then if Shell is open to negotiations... They told us this morning, they swear that they want to sell it. The Bible wasn't here, but they want to sell it. Are you willing to buy? And maybe it's a crazy question, but do you have enough money to buy it? Do you think you could buy it?
11:25 a.m.
Business Development, Delek US Holdings
The short answer is yes and yes. That's dependent upon some financial assistance from municipalities, the financing that we organize. But of the $600 million, let's call it, that Shell would receive in the sale of the refinery business, based on our discussions with members of the committee here and our own resources, I think we thought that was very doable.
