(Source: Business Wire)Sunoco, Inc. (NYSE:SUN) announced today it is indefinitely idling all process units at its Eagle Point refinery located in Westville, New Jersey in an effort to reduce losses in its refining business at a time when a recessionary economy, weak demand for refined products, and increased global refining capacity have created margin pressure on the entire refining industry. Sunoco will shift current Eagle Point production to its two nearby refineries in Marcus Hook and Philadelphia, Pennsylvania, which will now operate at higher capacity utilization. The company will be able to produce essentially the same amount of refined products in two facilities that it currently produces in three while continuing to meet customer demand.

Sunoco also announced today that its Board of Directors authorized a plan to reduce the quarterly dividend paid to shareholders to $0.15 from $0.30 per outstanding share of the company's common stock, effective beginning in the first quarter of 2010. Reducing the dividend preserves additional capital, gives the company greater flexibility to pursue its business strategy, and brings its yield more in line with its peers.

"We anticipated a downturn in the refining industry and took steps earlier this year to lower costs and enhance our competitive position. However, the operating environment continues to be very poor, requiring us to take further decisive action to effectively manage through the current downturn, while positioning Sunoco for profitable growth in future market conditions," said Lynn Elsenhans, Sunoco's Chairman and Chief Executive Officer. "Idling Eagle Point, the asset least interconnected with our other operations, will enable us to significantly improve utilization rates at our two other local refineries and reduce our break-even costs to more competitive levels."

The company intends to idle Eagle Point until market conditions improve and will evaluate this decision and other options on an ongoing basis, including the feasibility of using the facility to produce alternative fuels in the future. Idling Eagle Point, the most recent addition to Sunoco's refining system, minimizes disruption to the rest of the company's operations. While Marcus Hook and Philadelphia serve as distribution hubs that feed refined products directly into Sunoco's branded retail network, Eagle Point is not as directly linked. Although the production units at Eagle Point will be idled, refined product storage and handling operations will continue. The products rack at Eagle Point owned by Sunoco Logistics Partners L.P. will remain open.

Approximately 400 employees will be furloughed during the idling of the facility. These employees will have the option to return to work in the event production resumes. During the furlough, the company will continue to pay its contribution to medical benefits for employees and dependents covered at the time of the idling for the duration of the furlough. In addition, the company will offer a voluntary severance program to affected employees, which includes job placement assistance and retraining.

Ms. Elsenhans said, "The decision to idle Eagle Point did not come easily. Actions that impact the lives of employees, their families and the communities they live in are always very difficult. Sunoco appreciates the hard work and dedication of our employees and is committed to treating them with respect."

The company expects to reduce its pretax expense base by approximately $250 million per year from the idling of Eagle Point. These savings are in addition to its previously announced target of $300 million in annualized Business Improvement Initiative savings by the end of 2009.