Former refinery chief Philip Rinaldi wants an encore, launches campaign to restart bankrupt Philadelphia fuel complex

Aug. 28--Philip Rinaldi, the former chief executive of Philadelphia Energy Solutions (PES) who retired in 2017, is formally bidding to buy and restart the bankrupt South Philadelphia refinery complex that abruptly shut down in June after a fire and explosion.

Rinaldi, 73, who headed the company that revived the 1,300-acre complex in 2012 when previous owner Sunoco exited refining, has expressed an interest in coming out of retirement to rescue the plant that was his personal project for seven years. With extensive connections to the business and political leaders, to energy-industry executives, and to the refinery's labor union, Rinaldi becomes the front-runner to assume ownership of the largest refinery on the East Coast.

"My focus and drive in pursuing this acquisition is to revitalize, modernize, and develop the site and the strategic refinery business that has existed there for decades to their full potential," Rinaldi said in a statement. "We can reinvigorate the site as an economic juggernaut that generates billions of dollars of revenue and provides thousands of high-paying jobs for our skilled professional and labor workforce."

Rinaldi's new company, Philadelphia Energy Industries (PEI), would restart the refinery as a conventional fuel-manufacturing facility. But it has also entered into a cooperation agreement with RNG Energy Solutions, a company that announced plans last year to build a $120 million digester that can convert more than 1,100 tons of food waste a day into renewable methane gas.

The closure of the refinery -- which employed 1,100 people but was also the city's single-largest source of air pollution -- had inspired a flurry of speculation among various interest groups over reviving the property as a refinery or re-imagining the 150-year-old manufacturing site in a new clean-energy role.

Rinaldi's partnership with a renewable fuel manufacturer is unlikely to assuage local environmentalists and community groups, who had dubbed the self-proclaimed industrialist as "Fossil Phil" when he led a Greater Philadelphia Chamber of Commerce effort to transform Philadelphia into an "energy hub." They say the refinery is a major nuisance, and its danger was underscored by the June 21 explosion that rocked the city.

Rinaldi on Monday declined to comment on the bid, saying he was constrained by a non-disclosure agreement with the current owners.

Several other companies have shown interest in the shuttered refinery, including S.G. Preston Co., a Philadelphia biofuels producer that last week said it was interested in acquiring the refinery and converting the equipment to manufacture renewable diesel and jet fuels from fats and oils.

Owning and operating a refinery is not for the faint of heart, nor for those without resources. Refining oil can be lucrative when demand and fuel prices are high, but it is a cyclical industry where profit margins can evaporate for long stretches, while the plant still requires millions of dollars just for maintenance.

Rinaldi and other former refinery executives still hold a 2.7 percent share of Philadelphia Energy Solutions after it emerged from bankruptcy a year ago, only to sink again under the weight of a heavy debt load and a a reliance on expensive crude oil. When the June fire forced the refinery to close, the owners quickly declared bankruptcy again.

PES now is owned primarily by its former creditors. Credit Suisse Asset Management holds 29.4 percent of the shares and Bardin Hill Investment Partners, formerly known as Halcyon Capital Management, owns 26.7 percent, according to the bankruptcy filing.

The Carlyle Group, a private equity giant that led the effort to revive the refinery in 2012, retains a 15 percent share. Energy Transfer Partners LP, Sunoco's parent, has a 7.4 percent share. Activist investor Daniel S. Loeb's Third Point Loan LLC holds a 7.3 percent share.of the company.

When Rinaldi assumed the helm at PES in 2012, he expressed a vision for transforming the refinery complex into a diverse collection of energy-related businesses fueled partly by the Marcellus Shale natural-gas boom, including power generation, fertilizer production and chemical manufacturing.

The company's biggest achievement was to build a massive rail yard where North American crude oil, transported by train, could be rapidly unloaded. The access to discounted crude oil from the Dakotas turned out to be a short-lived boost to the refinery's fortunes, until the oil became too expensive to transport by rail.

Rinaldi's statement Wednesday contained echoes of his 2012 vision, including aspirations for additional development opportunities for the site.

"I understand that the energy industry is undergoing an evolution, which is why a major part of my focus is on implementing a holistic, sustainable, and sensitive approach to operations on the site with the goal of making the facility the industrial pride of Philadelphia," Rinaldi said in the statement.

"The business model that we are putting together -- which includes identifying additional development opportunities for the site where we see synergistic relationships -- will enable the refinery site to be profitable while increasing our focus on green and renewable energy," he said. "RNG Energy is already moving forward with an excellent renewable energy project on the site, and we want to work with the company on similar, future innovations."

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