NEW YORK (Reuters) - Philadelphia Energy Solutions (PES) suspended annual bonuses to employees last week, according to three sources familiar with the company’s moves, in the latest sign the refiner is struggling to find its financial footing after emerging from bankruptcy last year.
The company told union members in a letter on April 5 that the board and senior leadership decided not to grant any bonuses this year, but did not explain why, according to a copy of the letter seen by Reuters.
Non-union personnel bonuses have also been frozen, the three sources told Reuters.
“This is about saving cash. They have to keep cash at certain levels to avoid banks taking over accounts,” said one of the sources, who had been briefed on company operations.
The company has 650 union employees and they typically receive a bonus of a few thousand dollars annually, the source said.
PES is seeking concessions from the refinery’s union and asking them to begin negotiating ahead of their contract expiring in September, two of the sources said. The company is looking for cuts in union and pension and health benefits, the sources said.
Company spokeswoman Cherice Corley declined comment, citing personnel matters as confidential.
PES, which exited bankruptcy in August, saw its cash balance fall to $87.7 million at the end of 2018, down from $148 million just three months earlier, according to a post-bankruptcy financial report filed in January.
The company entered bankruptcy roughly a year ago with $43 million cash on hand, court documents show.
PES scaled back a planned January maintenance project due to cash issues, two sources familiar with the plant operations told Reuters in February. It had cut health and pension benefits ahead of last year’s bankruptcy, but those were restored after the union took the company to arbitration.
Senior executives including the chief operating officer and chief commercial officer left last month amid a broader management overhaul.
Private-equity giant Carlyle Group LP rescued the 330,000 barrel-per-day refinery from closure in 2012, betting they could tap cheap shale oil out of North Dakota and turn a hefty profit.
The bet was lucrative in the early years, but once the discount on North Dakota’s oil eroded due to better transport options, PES’s bottom line suffered. Carlyle banked hundreds of millions of dividend-style payments during its tenure; it is now a minority owner.
Reporting by Jarrett Renshaw and Stephanie Kelly, Editing by Rosalba O’Brien
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