(Bloomberg) — An oil refinery that was after one of the most significant in North The us filed for bankruptcy soon after a collection of environmental breaches and a governing administration-ordered shut down, highlighting pressures faced by the oil field to control its environmental impact.
Limetree Bay Refining LLC sought creditor security on Monday soon after the U.S. Environmental Security Company halted its operations earlier this calendar year. The St. Croix, U.S. Virgin Islands-dependent refinery, which submitted for bankruptcy in 2015 beneath past ownership, said in a assertion that it strategies to use the courtroom protection approach in Houston to negotiate with lenders and fairness holders and weigh solutions which includes asset income.
The refinery sought individual bankruptcy “due to critical regulatory and money constraints” that forced it to suspend its refinery functions indefinitely, and has lined up as significantly as $25 million of so-referred to as debtor-in-possession financing that will assist it maintain the refinery by means of the Chapter 11 system, according to the statement.
Arena Investors is furnishing the DIP financial loan by means of an affiliated entity, according to persons with information of the problem who questioned not to be named talking about a non-public matter. A representative for Arena did not quickly reply to a request for comment.
The refinery, which had restarted operations in February just after yrs of inactivity, was perfectly positioned to course of action bitter crude oil materials from South America and meet up with fuel demand in regions these as the U.S. East Coast.
The 200,000-barrel-a-day refinery in Could was pressured to halt functions pursuing emissions incidents that bundled contamination of consuming drinking water. On June 21, the firm explained it was suspending ideas to restart the business enterprise and chopping a lot more than 270 employees just after efforts to increase funds foundered. In the several years prior to the troubles, Limetree invested additional than $4 billion to refurbish the refinery, according to courtroom papers.
Limetree’s woes have prompted investigations by the EPA and the Virgin Islands Department of Preparing and Nationwide Resources, according to courtroom papers. The Office environment of the U.S. Attorney in the Virgin Islands also requested to go to the refinery, and the firm faces various class-motion lawsuits similar to the alleged pollution challenges, the company’s chief restructuring officer, Mark Shapiro, stated in court documents.
The corporation is in talks with regulators about the situations for reopening, Shapiro mentioned. Affiliates of BP Plc and Baker Hughes Co. are among its largest lenders, in accordance to courtroom papers.
Limetree is controlled by EIG International Vitality Associates, which said in an emailed assertion that it became the “reluctant” proprietor of the troubled refining procedure in April as part of a restructuring. EIG experienced earlier led a team of Limetree’s so-named mezzanine creditors and has been associated in initiatives to revive the refinery since 2018. EIG, based in Washington D.C., specializes in private investments in vitality infrastructure.
Terminal Business enterprise
Limetree was fashioned in 2016 following an affiliate of ArcLight Capital Associates and Freepoint Commodities LLC acquired the St. Croix refining models and terminal assets from Hovensa LLC, a enterprise owned by Hess Corp. and Venezuela’s point out-owned Petroleos de Venezuela SA that had filed for bankruptcy months before. In 2018, Limetree announced an approximately $1.3 billion funding program to restart the idled refinery, which started out jogging before this year.
The refinery’s parent will carry on to operate its related oil storage terminal business. That unit is functioning with fiscal and authorized advisers to navigate economical strains affiliated with the shuttered refinery, Bloomberg described on Monday.
The personal bankruptcy comes at a time when the field is battling with shrinking profitability, surplus generation capability and rising competitiveness from mega-refineries in Asia amid a force by the Biden Administration to transfer the U.S absent from fossil fuels.
The case is Limetree Bay Products and services LLC, 21-32351, U.S. Personal bankruptcy Court for the Southern District of Texas (Houston).
(Updates with facts about lenders starting in 8th paragraph)
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