November 20, 2015 [OPIS] - Limetree Bay Holdings emerged as the winner of the Hovensa terminaling assets on Thursday, according to the latest Hovensa bankruptcy documents.
Limetree Bay was a stalking-horse bidder in the bankruptcy process, setting the floor price at $184 million on Sept. 14. The winning price for Hovensa was $190 million.
Other interested parties in the auction include Buckeye and about three metal scrapping companies.
Limetree Bay and Buckeye were only interested in the 32-million-bbl-capacity terminal at Hovensa, and traders had told OPIS previously that the St. Croix terminal has an operational capacity of about 15 million to 16 million bbl. The remaining 50% of the capacity was unused and mothballed.
Limetree Bay is an affiliate of ArcLight Capital Partners LLC, a Boston-based private equity firm focused on energy infrastructure investments, affiliates of which own companies operating in the terminaling arena.
OPIS reported in September that the earliest date that the Hovensa oil terminal could return to operational status would be at the end of 2016 if everything goes well. That terminal has been shut since February 2015 after a failed asset sale process.
The new owner of Hovensa terminal or both the terminal and refinery assets is expected to engage in lengthy discussions with the Virgin Islands government on tax concession, fuel supply and employment.
The successful sale will require the negotiation of an operating agreement with Virgin Islands Gov. Kenneth Mapp, approval of the operating agreement by the Virgin Islands Senate and bankruptcy court approval.
The Senate approval process may also prevent a prompt restart of the terminal.
Finally, the Environmental Protection Agency would be involved in the permitting for operating the terminal.
Hovensa has the potential to be a “choice terminal” in the Caribbean, when compared with BORCO and Statia, for clean oil products due to its location relative to South America, in-line/closed loop blending capabilities and ship berths that are protected from weather, industry sources said.
“After all, Hovensa was a refinery” that boasted efficient logistics for crude and oil products storage as well as marine loading and unloading facilities, a source said.
Also, the terminal asset at St. Croix offers room for potential storage expansion as well, depending on capitalization of the new owner.
Hovensa shut its 500,000-b/d St. Croix refinery in early 2012 due to poor operational economics.
