DEAL DONE! Federal Bankruptcy Court Judge Approves HOVENSA Sale To Limetree Bay for $800M
WILMINGTON, Delaware – A federal bankruptcy court judge decided today that the HOVENSA oil refinery complex can be sold to stalking horse bidder Limetree Bay Holdings and commodities trader Freepoint, the Virgin Islands Free Press has learned.
News that U.S. Bankruptcy Court Judge Mary Walrath had approved the sale of the HOVENSA oil refinery complex in St. Croix to Limetree Bay Holdings came just after midnight. There was a gag order on the details until today.
Walrath made the decision Monday but said details of a large portion of the sale hearing cannot be made public, under penalty of contempt, until Gov. Kenneth E. Mapp announced them today.
In a press conference at Government House on St. Thomas this morning, Mapp said the total sale amounts to $800 million, with $220 million to be paid up front.
The approved transaction would allow Limetree Bay Holding, a unit of equity fund ArcLight Capital Partners, to acquire the mothballed 350,000 barrels per day HOVENSA oil and gas refinery.
ArcLight outbid Buckeye Partners, which has other storage assets in the Caribbean, sources said.
The judge’s approval clears a major hurdle to reviving the once vibrant downstream complex in the Virgin Islands industrial capital.
But the fate of the transaction now lies with the Virgin Islands Legislature, which must approve an operating agreement.
The Senate last December rejected an operating agreement with start-up firm Atlantic Basin Refining that intended to restart the refinery.
HOVENSA is owned by Hess subsidiary Hovic and Venezuelan state-owned oil company, Petróleos de Venezuela, S.A. (PDVSA). Neither company commented on the transaction.
The South Shore refinery used to be the life’s blood of St. Croix and had a peak capacity of roughly 500,000 barrels of oil per day. It primarily supplied the U.S. Atlantic coast products market. Much of the heavy crude it processed came from Venezuela.
The lack of a reliable, affordable supply of electricity (the refinery was forced to produce its own) eventually cut significantly into the facility’s ability to turn a profit. Especially when refineries it was in competition with on the Gulf Coast of the United States had easy access to cheap, reliable sources of electricity.
HOVENSA reduced its capacity to 350,000 barrels of oil produced per day in 2011. It was completely shut down in January 2012 after it said it lost $1.3 billion over three years.