JAMAICA-based West Indies Petroleum Limited (WIP) last Friday closed the deal to acquire the Limetree Bay Refinery in St Croix for US$62 million.
WIP, incorporated in 2012, started in the ship-bunkering business in the Caribbean and Latin American region, but has since expanded into final petroleum products and is targeting regional expansion.
WIP CEO Charles Chambers told the Jamaica Observer this week that the acquisition was successfully executed and that more of its plans for the new subsidiary will be shared later. The company displaced a St Croix bidder, St Croix Energy, which had bid US$57 million for the asset and would have been selected if West Indies Petroleum had failed to make the payment last week.
Limetree Bay Refinery is located on the south shore of St Croix. It is described as the largest refinery in the Western Hemisphere, targeting increasing global demand for its products.
After shutting down in 2012 and declaring bankruptcy in 2015, St Croix's Limetree Bay refinery restarted operations under new ownership in February last year. But within days, the refinery began experiencing what became a series of high-profile accidents that enraged nearby residents, raining oil down on homes, contaminating drinking water and releasing hazardous fumes so pungent that officials shut down schools and offices for days, according to a report by insideclimatenews.org, an online environmental news publication.
The issues caused the refinery to be shuttered in May 2021, after investigations by the US Environmental Protection Agency (EPA). Experts, at the time, noted that it needed a minimum US$1 billion to enter viability. The company filed for Chapter 11 bankruptcy protection in the United States.
The original auction for the refinery took place in the US Bankruptcy Court for the Southern District of Texas late in November 2021. Previously, competing bidder St Croix Energy won a first round in bidding for the refinery.
However, Limetree Bay Refinery through its lawyers filed to reopen the auction, stating that another bidder, WIP, was involved. They said WIP's chief executive officer had fallen ill and needed emergency medical attention in the days before the auction.
WIP was offering US$30 million cash upfront, which was superior to St Croix Energy's US$20 million in cash upfront. Both companies upped the ante in the second round. In the reconvened hearing in December St Croix Energy bid $57 million in cash, but WIP's $62 million trumped the offer.
WIP had until January 21, 2022 to close the sale.
The Jamaican cmpany has proposed a plan to seek a new agreement with the EPA for restart of the refinery.