Quantcast
Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Limetree Bay Refining, LLC – Court Approves Enhanced Bidder Protections for Newly Formed Stalking Horse St. Croix Energy, Sale Hearing Set for December 3rd

0
0

November 22, 2021 – The Court hearing the Limetree Bay Refining cases issued an order approving amended bidding procedures in respect of a sale of substantially all of the Debtors’ assets [Docket No. 813]. As amended (the original order issued on August 11 at Docket No. 392) the bidding procedures order provides recently named stalking horse St. Croix Energy, LLLP ($20.0mn bid) with bidder protections comprised of a $1.0mn expense reimbursement (effectively increasing bidder protections from 3% to 5%).

St Croix Energy is reportedly a recently formed consortium of local businessmen committed to seeing the shuttered Virgin Islands refinery remediated and then reopened. Exactly how they intend to finance the $20.0mn cash element of the acquisition price, much less take steps necessary to remediate the facility (which has reportedly absorbed over $4.1bn of investment without rendering it compliant with environmental regulations), remains far from clear. A local newspaper suggests that the bid may be a lot less formed than one might expect of a bid deemed by the Debtors as "qualified," providing: "A group of local and national businessmen with deep pockets have formed a company named 'St. Croix Energy' with the purpose of exploring the viability of an environmentally friendly restart of the Limetree Bay Refinery, a well-placed person has confirmed to the Consortium."

The Debtors' requesting motion [Docket No. 760] underscores the continuing oddness of the potential bid and the selection of a stalking horse with unclear bona fides, noting: "The Debtors believe the consideration received for the Stalking Horse Bidder is well in excess of the nominal amount of $20 million in the asset purchase agreement. The Stalking Horse Bidder has agreed to incur millions in connection with the continuation of the Debtors’ business post closing for operations and other expenses. The Debtors also believe that the remediation costs would be very significant in these cases. When factoring in the value provided by the Stalking Horse Bidder’s agreement to pay certain continued costs and the avoidance of remediation costs, the Debtors believe the total value to the estates of entering into the asset purchase agreement would make the Bid Protections in line with 3% or less of that aggregate value…." while also providing that

"While the Debtors believe they will receive additional qualified bids and are in the process of working with other qualified bidders, the bid of St. Croix Energy, LLLP (the 'Stalking Horse Bidder') is the only qualified bid received by the date of this Motion."

At least the Debtors have bought themselves a bit more time, which may be the point.

At least one important observer was pleased with the late arrival of a potential purchaser, with Judge David Jones reportedly commenting as to the stalking horse's counsel (Ropes & Gray's Gregg Galardi): "Get him handcuffed and in a room."

The order provides: "The Debtors shall provide the Stalking Horse Bidder as a Bid Protection an expense reimbursement in the amount $1 million to reimburse the Stalking Horse Bidder for expenses, including attorneys’ and investment banking fees and costs, incurred in connection with the Stalking Horse Bid, which Bid Protection shall be payable solely from the proceeds of any sale transaction that has a purchase price of at least $20 million; provided, however, if the consideration for such sale transaction is in the form of a credit bid of existing debt obligations, the Bid Protection in the amount of $1 million shall be allowed as an administrative expense claim consistent with paragraph 3 below; provided, further, that the Stalking Horse Bidder shall not be entitled to any Bid Protections, and any such amounts shall not be due or payable or otherwise allowed as an administrative expense claim, if (a) either the Debtors or the Stalking Horse Bidder declines to proceed with or terminates the Stalking Horse Bid due to the inability to reach agreement on any material transaction document…"

Background

The Debtors' requesting motion [Docket No. 760] notes, “The Debtors, through their investment bankers Jefferies LLC, commenced an extensive ‘going-concern sale’ marketing process over the past three months. The Debtors, through B. Riley Advisory Services, also simultaneously performed a liquidation sale process. In connection with the Debtors’ going-concern sale marketing process, the Debtors officially contacted 183 potential buyers. The Debtors signed NDAs with 35 potential interested parties who accessed the Debtors’ data room and performed due diligence. The Debtors received several letters of interest for a going-concern sale. While the Debtors believe they will receive additional qualified bids and are in the process of working with other qualified bidders, the bid of St. Croix Energy, LLLP (the ‘Stalking Horse Bidder’) is the only qualified bid received by the date of this Motion.

After extensive marketing efforts, on or around November 14, 2021, the Debtors received a firm bid with an executed asset purchase agreement from the Stalking Horse Bidder for $20 million for all or substantially all of the Debtors’ Assets on a ‘going-concern’ basis. Over the last few days, the Debtors have negotiated a significant increase in the amount being offered by the Stalking Horse Bidder. In exchange, the Stalking Horse Bidder has required an increase in the total allowable amount of Bid Protections from three percent (3%) to five percent (5%) — which would result in reimbursement of expenses of $1 million payable on the closing of a sale.

The Stalking Horse Bidder will receive payment of the Bid Protections whether or not it is the successful bidder and will be paid from the proceeds of the purchase price. Thus, with these changes to the Bid Protections, a $20 million purchase price would generate $19 million for the Debtors’ estates (the ‘Estates’). The $1 million Bid Protections would be deducted from the $20 million purchase price such that the Debtors would receive $19 million whether or not the Stalking Horse Bidder is the winning bidder and closes a transaction with the Debtors.

Based upon the Stalking Horse Bidder’s participation in the sale process, the Debtors have observed a considerable amount of outside professional time associated with this proposed sale. The Stalking Horse Bidder has represented to the Debtors it has already incurred, or will shortly incur, in excess of the amount sought as reimbursement in professional fees and expenses. The complexities of the Debtors’ businesses and attendant professional costs are evident — given all of the regulatory, operational, compliance, financial and other issues required for a successful sale and planned restart of the refinery.”

The motion further explains, "The Debtors believe the consideration received for the Stalking Horse Bidder is well in excess of the nominal amount of $20 million in the asset purchase agreement. The Stalking Horse Bidder has agreed to incur millions in connection with the continuation of the Debtors’ business post closing for operations and other expenses. The Debtors also believe that the remediation costs would be very significant in these cases. When factoring in the value provided by the Stalking Horse Bidder’s agreement to pay certain continued costs and the avoidance of remediation costs, the Debtors believe the total value to the estates of entering into the asset purchase agreement would make the Bid Protections in line with 3% or less of that aggregate value."

Extended Milestones [Docket No. 761]:

  • Auction Date, if necessary: November 18, 2021
  • Deadline to file the Designation of Winning Bid: November 22, 2021
  • Deadline to object to the Sale: November 26, 2021
  • Sale Hearing: December 3, 2021

Read more Bankruptcy News

The post Limetree Bay Refining, LLC – Court Approves Enhanced Bidder Protections for Newly Formed Stalking Horse St. Croix Energy, Sale Hearing Set for December 3rd appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles





Latest Images