Limetree Bay refinery files for bankruptcy after regulatory issues

(Bloomberg) – Limetree Bay Refining LLC filed for Chapter 11 bankruptcy in Houston on Monday after the U.S. Environmental Protection Agency shut down its Caribbean oil refinery.

The St. Croix, U.S. Virgin Islands-based company said in a statement it plans to use the judicial protection process to negotiate with creditors and shareholders and assess options, including the sale of active.

The refinery has filed for bankruptcy “due to severe regulatory and financial constraints” that have forced it to suspend its refinery operations indefinitely, and has lined up up to $ 25 million in so-called debtor-in-charge financing that will help it. to maintain the refinery through the chapter. 11 process, the statement said.

Arena Investors is providing the DIP loan through an affiliated entity, according to people with knowledge of the matter who asked not to be named to discuss a private matter. An Arena representative did not immediately respond to a request for comment.

Interrupted operations

The 200,000 barrel-per-day refinery in May was forced to shut down following emissions incidents that included contamination of drinking water. On June 21, the company announced it was suspending plans to restart the business and cutting more than 270 employees after efforts to raise capital failed. In the years leading up to the unrest, Limetree spent more than $ 4 billion to refurbish the refinery, according to court documents.

Limetree’s woes have sparked investigations by the EPA and the Virgin Islands Department of Planning and National Resources, according to court documents. The U.S. Virgin Islands Attorney’s Office has also requested a tour of the refinery, and the company faces several class actions related to the alleged pollution issues, the company’s chief restructuring officer, Mark Shapiro, said in court documents. .

The company is in talks with regulators over the conditions for the reopening, Shapiro said.

Limetree is controlled by EIG Global Energy Partners, which said in an emailed statement that it became the “reluctant” owner of the troubled refinery operation in April as part of a restructuring. EIG previously led a group of so-called Limetree mezzanine lenders and has been involved in the refinery’s revival efforts since 2018. EIG, based in Washington DC, specializes in private investments in energy infrastructure.

Business terminal

The refinery’s parent company will continue to operate its related oil storage terminal activities. This unit is working with financial and legal advisers to overcome financial strains associated with the closed refinery, Bloomberg reported on Monday.

The bankruptcy comes at a time when the industry grapples with declining profitability, excess production capacity and increasing competition from mega-refineries in Asia amid pressure from the Biden administration to push states away -United fossil fuels.

This is the refinery’s second time in bankruptcy court.

Limetree was formed in 2016 after a subsidiary of ArcLight Capital Partners and Freepoint Commodities LLC purchased the refining units and assets of the St. Croix terminal from Hovensa LLC, a company owned by Hess Corp. and the Venezuelan state-owned company Petroleos de Venezuela SA, which had filed for bankruptcy a few months earlier. In 2018, Limetree announced a roughly $ 1.3 billion financing plan to restart the idle refinery, which began operating earlier this year.

The case is Limetree Bay Services LLC, 21-32351, US Bankruptcy Court for the Southern District of Texas (Houston).

(Adds details of federal environmental investigations and current owners throughout.)

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