Tosco Reports Net Loss of $210 Million in Year
Ailing Tosco Corp. on Friday reported a $210.7-million net loss for 1984 and announced that it has reached an agreement in principle with its banks to postpone interest payments on its debt if cash flow doesn’t reach certain levels.
For the fourth quarter of 1984, Santa Monica-based Tosco had a net loss of $155.2 million after non-cash write-downs of $131.7 million, compared to a $138.6-million net loss after non-cash write-downs of $120.6 million in the fourth quarter of 1983. Sales for the quarter fell to $465.1 million from $481.1 million.
For the full year, the independent oil refiner narrowed its net loss to $210.7 million, including $131.7 million in non-cash write-downs, from $378.1 million after $297 million in non-cash write-downs in 1983. Sales in 1984 dropped to $1.9 billion from $2.5 billion the previous year.
The bulk of the 1984 write-downs are related to Tosco’s decision to sell its El Dorado, Ark., refinery and crude oil refining business at an anticipated loss. A Tosco spokesman said the company is negotiating with a prospective buyer and hopes to dispose of the operation by the end of March.
The write-downs also included reductions to the carrying value of some oil and gas assets because of the continuing decline of crude oil prices in the fourth quarter.
In addition, a group of 19 banks led by First National Bank of Boston agreed to amendments to existing bank-debt agreements that require Tosco to make cash interest payments in 1985 only if cash flow exceeds certain levels, which were not revealed. Any interest that was deferred would not be due until January, 1987.
Under the agreement, net proceeds from the sale of the El Dorado refinery would be used to pay down the bank debt. Tosco’s debt was $515 million at the end of 1984, down from $694 million the year before.
For the first nine months of 1984, Tosco made interest payments by issuing stock but was required to begin paying in cash last October under a debt-restructuring agreement reached in 1983.
The agreement “will provide Tosco with near-term liquidity and allows Tosco to proceed with plans to concentrate operations on the West Coast, where the company sees its greatest opportunities,” Tosco President and Chief Executive Michael J. Talbot said. Tosco is continuing “to explore long-term solutions of its financial requirements.”
“It looks to me that the banks didn’t have any choice but to allow this window of forgiveness,” said Greg Ireland, a vice president of Los Angeles-based Capital Guardian Trust Co.
