"A provisional financing agreement has been found to keep the talks going," the source told Reuters in Paris after days of French and Swiss government pressure for a solution to keep the business running and avoid job cuts.
The source was unable to offer details, but spoke as Swiss officials confirmed they were urging the banking consortium that abruptly withdrew financing this week to reconsider.
"I called yesterday (Thursday) to both Swiss banks, UBS and Credit Suisse, to insist on the local and strategic importance of the Cressier plant," said Thierry Grosjean, economy minister at the Swiss canton of Neuchatel, home to the Cressier refinery.
Petroplus, a victim of Europe's tough refinery environment and an investment strategy that fell foul of an industry downturn, has been locked in talks with 13 lending banks to find a new arrangement after they froze a $1 billion credit facility the group relied on to buy crude oil.
It remained unclear why the banks had cut funding just two months after agreeing to allow the troubled company to breach debt covenants without penalty.
Analysts speculated that a worsening of the outlook for the industry and pressure from governments on the financial sector to boost bank capital might be among the reasons.
O'MALLEY CONNECTION
The ailing company's latest financing problems throw a spotlight on Thomas O'Malley, the veteran oil refining entrepreneur who ran the company from 2006, but who in 2011 stepped down as chairman and reduced his personal stake in the business below 3 percent.
He remains CEO and chairman at PBF Energy, a joint venture of private equity firms Blackstone and First Reserve. In November, PBF announced plans to raise funds through an initial public offering.
The frozen credit facility will force Petroplus to shut down its 162,000 barrel per day Petit Couronne refinery.
"There is no more crude coming in so the plant cannot work anymore so we need to start shutting down all the plant's units on Monday, but this is a technical shutdown," said a spokeswoman for Petroplus in France. "The shutdown will take about a week."
Petroplus also has refineries in Coryton in the United Kingdom, Antwerp in Belgium, and Ingolstadt in Germany.
A union source in Antwerp said the refinery there could be shut as early as Sunday.
Together, the five account for over 4 percent of European Union capacity, but given the slack in the industry, closures are expected to create a major supply issue.
The European refining sector has been struggling for years due to poor margins and weak demand for fuel products, prompting French major Total to shut its Dunkirk refinery at the start of 2010 and Petroplus to end refining at its Reichstett plant in eastern France in May 2011.
The French government said earlier this week that the French banks in the consortium — BNP Paribas, Societe Generale and Natixis — were read to negotiate a new financing facility.
Petroplus's 13 lenders, which also includes Credit Suisse , Morgan Stanley and Deutsche Bank, continued to negotiate on Friday.
The company's stock has fallen more than 50 percent since Tuesday's announcement, but gained 2.4 percent to 1.68 euros by 1030 GMT amid hopes among some traders that the provisional financing agreement meant a positive solution may be found.
"This (provisional financing) would likely be a bridging period to give them breathing room before they can implement a crude supply arrangement with one of the big US banks or trading houses," said a banking source with knowledge of the situation.
