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Hess Bid. I Don't Understand. Explanation Pls  

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Beeski
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December 2, 2015 1:41 pm  

Beeski, it would be interesting to see the $ value of that concession list vs the $ VI govt gets. Need to take into consideration time value of money, I guess.

$200mil up front when the GVI is flat broke goes a long way.
There is also the recurring revenues on operational taxes / fees.
And hopefully more than 280 jobs.


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IslandHops
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December 2, 2015 2:05 pm  

There are 80 jobs promised, 80% of which must be locals (>1yr residence). So 64 locals minimum.

Mapp said in the press conference probably 200 jobs during the first 2-3 years, that's his number and not in any agreement. His guess is probably attributable to the capital investment of 125m to be made (expanding the storage capacity).

Just like Mapp's 800m hyped and hypothetical figure of value of the deal, when it's really only 220m cash up front. Other funds are conditional or part of the annual payments in lieu of taxes.

In the words of Joe Friday - "All we want are the facts, ma'am"

(edited) Of course this is only a drop in the bucket in comparison to the > 2B the territory has in outstanding long term debt.


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ms411
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December 2, 2015 2:07 pm  

Thanks, but that I know. If you don't do the numbers you can't determine how much we gain or lose. This is how salespeople and politicians muddy the truth by not revealing the numbers. If nobody posts the numbers, I'll try to figure it out on my own, but I have other things to do first.


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Alana33
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ms411
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December 2, 2015 3:28 pm  

Thanks, Alana. I'll read it when the paper comes home tonight.


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jones_st.croix
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December 2, 2015 9:13 pm  

Any deal that doesn't include an operating refinery is not in the long term interest of the territory. We have to look long term. If there were any other glimmers of hope in the horizon for a large employer to move in it would be another discussion. Independent refineries are making record profits right now. Can someone please tell me why there is supposedly no interest in restarting it? Yes I know about the fines, retrofits, etc.


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janeinstx
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December 2, 2015 10:54 pm  

ArcLight is working with a credible partner (they have not released a name) to restart certain refinery process units. This partner has visited the site several times over the last year


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jones_st.croix
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December 2, 2015 11:11 pm  

If you believe that then good for you. There are a lot of if's to that claim. What's for certain in the agreement are the procedures for demolition and scrapping of the refinery assets. They have no interest in refining that just makes the deal sound better. If they had a serious partner they would have named names and a representative would have been at the press conference like Sinopec.

ArcLight is working with a credible partner (they have not released a name) to restart certain refinery process units. This partner has visited the site several times over the last year


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ms411
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December 3, 2015 10:15 am  

I just read yesterday's Avis, and to answer Jones' question, the refineries doing well now are close to shale oil fields which St Croix isn't. The Avis didn't mention what VI is giving up in exchange, either.


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vicanuck
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December 3, 2015 11:25 am  

Of course, the western side of the refinery will never be recommissioned and should be dismantled. But there is hope for the eastern side of the refinery.


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Alana33
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December 3, 2015 12:20 pm  

Aren't the partners the China Petroleum and Chemical corporation, Sinopec, which was mentioned in the Daily News article?

I've heard that's not exactly being greeted with open arms.


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islandjoan
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December 3, 2015 1:34 pm  

Here's a link to a Bloomberg story about Sinopec and the refinery deal:

Bloomberg Sinopec


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Alana33
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December 3, 2015 6:19 pm  

Any safety records for this company?
After reading how China's fishing industry conducts business on their mega trawlers, the horrendous violations with regard to both fishing unsustainably, and human rights, I can't say I feel great about the VI being in partnership with a Chinese chemical and petroleum company. Hopefully, it won't be an oil spill waiting to happen.

As an aside, Chinese corporations now own Starkist and Bumblebee's brands of Tuna. I'm going to have order tuna fish from the states as no longer wish to support those brands. There's one other top brand that is Chinese owned. Can't think of it right now.
Sorry for the segway.......


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IslandHops
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December 3, 2015 6:29 pm  

It all sounds very fishy to me 🙂

Sinopec is just leasing the storage capacity - doesn't mean they will be hands on running it. That would still be Limetree's responsibility as the owner and operating company.

I haven't heard a peep from any of the senators reactions to the deal?


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CarlHartmann
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December 3, 2015 9:59 pm  

Sinopec is just leasing the storage capacity - doesn't mean they will be hands on running it. That would still be Limetree's responsibility as the owner and operating company.

IslandHops is correct. Sinopec is just a customer with which Arclight has a long-term contract for 75% of the present storage capacity. It owns nothing. One big advantage of our location (relative to the expanded Panama Canal) and the large Asian purchases of South American oil may well be a middle level refinery that would convert that bulk oil into the intermediate product -- naptha. That would be lower polluting refinery and at the same time create a huge advantage in reducing volume for shipping through the canal and overseas. For that reason, the GVI believes Arclight brings a MUCH better long-term customer than a lot of the short term capacity that is being contracted for because of depressed oil prices.

Carl


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janeinstx
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December 3, 2015 10:38 pm  

(tu).

Sinopec is just leasing the storage capacity - doesn't mean they will be hands on running it. That would still be Limetree's responsibility as the owner and operating company.

IslandHops is correct. Sinopec is just a customer with which Arclight has a long-term contract for 75% of the present storage capacity. It owns nothing. One big advantage of our location (relative to the expanded Panama Canal) and the large Asian purchases of South American oil may well be a middle level refinery that would convert that bulk oil into the intermediate product -- naptha. That would be lower polluting refinery and at the same time create a huge advantage in reducing volume for shipping through the canal and overseas. For that reason, the GVI believes Arclight brings a MUCH better long-term customer than a lot of the short term capacity that is being contracted for because of depressed oil prices.

Carl


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Alana33
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December 3, 2015 11:53 pm  

Well, it ain't a done deal until the legislature signs off on it.


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janeinstx
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December 4, 2015 12:16 am  

One can only hope they don't screw it up.

Well, it ain't a done deal until the legislature signs off on it.


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CarlHartmann
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December 4, 2015 1:32 am  

If you have the time to read it -- here is part of the judge's order approving the sale -- it has a number of very interesting findings. See bolded sections.

IN THE DISTRICT COURT OF THE VIRGIN ISLANDS
BANKRUPTCY DIVISION - ST. CROIX, VIRGIN ISLANDS

In re:

HOVENSA L.L.C., Debtor. Case No. 1:15-bk-10003-MFW Docket Nos. 15 and 220

ORDER (A)(I) APPROVING THE SALE OF THE DEBTOR'S ASSETS, FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS; AND
(II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES; AND (B) GRANTING RELATED RELIEF

Upon the motion, dated September 15, 2015 (the "Motion"), of HOVENSA L.L.C., as debtor and debtor-in-possession (the "Debtor") in the above-captioned chapter 11 case (the "Chapter 11 Case''), pursuant to sections 105, 363, 365, 503, and 507 of title 11 of the United States Code (the "Bankruptcy Code''), Rules 2002, 6004, 6006, and 9014 of the Federal Rules of Bankruptcy Procedure (the ''Bankruptcy Rules"), and Local Rules 6004-1 and 6006-1, for (i) entry of an order (the "Bidding Procedures Order''): (a) approving the proposed auction and bidding procedures (the ''Bidding Procedures' '), including approval of the Break-Up Fee and the Expense Reimbursement (as such terms are defined in the Motion); (b) establishing procedures for the assumption and assignment of executory contracts and unexpired leases, including notice of proposed cure amounts (the "Assumption and Assignment Procedures ");
(c) approving the form and manner of notice of all procedures, protections, schedules, and agreements; and (d) scheduling an auction (the "Auction") and a hearing (the ·'Sale Hearing") to approve the sale transaction related to the Debtor's crude oil and product storage and terminalling business (the "Sale''); and (ii) entry of an order (the "Sale Order''): (a) approving the Sale of the Debtor's assets, free and clear of all Interests (as defined in paragraph V below);

(b) authorizing the assumption and assignment of certain executory contracts and unexpired leases; and (c) granting certain related relief; after holding a hearing on October 8, 2015 (the ''Bidding Procedures Hearing"), this Court having entered the Bidding Procedures Order on October 9, 2015 (Docket No. 220); and the Auction having been commenced on November 10, 2015 and thereafter closed on November 19, 2015; and Limetree Bay Holdings, LLC or its permitted designee (the "Buyer") having been selected as the Successful Bidder; and upon the Buyer, the Debtor, and Hess Oil Virgin Islands Corp. ("HOVIC") having entered into that certain Amended and Restated Asset Purchase Agreement in substantially the form attached hereto as Exhibit A, and as it may be amended, modified, or supplemented in accordance with the terms hereof and thereof (the ''Asset Purchase Agreement"); 1 and this Court having conducted the Sale Hearing to consider entry of this Sale Order on November 17, 19, and 30, 2015; and all parties in interest having been heard, or having had the opportunity to be heard, regarding the Motion, the Asset Purchase Agreement, and this Sale Order; and this Court having reviewed and considered the Motion and all objections thereto, and the arguments of counsel made, and the evidence adduced, at the Bidding Procedures Hearing and the Sale Hearing; and upon the entire record of the Bidding Procedures Hearing and the Sale Hearing, and after due deliberation thereon, and good cause appearing therefor:

1 Capitalized terms used, but not otherwise defined, herein shall have the meaning ascribed to such terms in the Asset Purchase Agreement or, if not defined therein, in the Motion.

THE COURT HEREBY FINDS THAT:

Jurisdiction, Final Order and Statutory Predicates

A. This Court has jurisdiction to hear and determine the Motion under 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b). Venue of this Chapter 11 Case and the Motion in this district is proper under 28 U.S.C. §§ 1408 and 1409.

B. This Sale Order constitutes a final order within the meaning of 28 U.S.C. § 158(a). Notwithstanding Bankruptcy Rules 6004(h) and 6006(d), and to any extent necessary under Bankruptcy Rule 9014 and Rule 54(b) of the Federal Rules of Civil Procedure, as made applicable by Bankruptcy Rule 7054, this Court expressly finds that there is no just reason for delay in the implementation of this Sale Order, and expressly directs entry of judgment as set forth herein.

C. The statutory predicates for the relief sought in the Motion are sections 105(a), 363, 365, 503, and 507 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006 and 9014, and the applicable Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of the Virgin Islands (the ·'Local Rules'').
Notice of the Sale, Auction and the Cure Payments

D. Actual written notice of the Sale Hearing, the Auction, the Motion, the Sale, and the assumption, assignment and/or transfer of the Assigned Contracts (as defined in paragraph F below), and a reasonable opportunity to object or be heard with respect thereto and to the entry of this Sale Order has been afforded to all known interested Persons and entities entitled to receive such notice, including, but not limited to, the following parties: (i) counsel to the Committee; (ii) counsel to the Buyer; (iii) the Office of the United States Trustee for the District of the U.S. Virgin Islands; (iv) all entities (or counsel therefore) known to have asserted any lien, charge, claim or encumbrance on the Purchased Assets; (v) all federal, state and local regulatory or taxing authorities which are reasonably ascertainable by the Debtor to have a known interest in the Purchased Assets; (vi) all known non-debtor counterparties to any unexpired leases or executory contracts that could potentially be assumed and assigned to the successful bidder; (vii) those parties who expressed a bona fide interest in acquiring the Assets in the six months preceding the Petition Date; (viii) the Internal Revenue Service; (ix) those parties who have made the appropriate filings requesting notice of all pleadings filed in the chapter 11 case; (x) the United States Attorney General's Office for the District of the Virgin Islands; (xi) Hess Oil Virgin Islands Corporation; (xii) PDVSA, V.I., Inc.; and (xiii) such other entities as may be required by applicable Bankruptcy Rules or applicable Local Rules or as may be reasonably requested by the Buyer.
E. The Debtor published the Auction and Sale Notice in each of The Financial Times, The Wall Street Journal, and The Virgin Islands Daily News on or about October 14, 2015.

F. In accordance with the provisions of the Bidding Procedures Order, the Debtor has served notice (the "Assumption and Assignment Notice") upon all of the non-debtor counterparties (the ·'Contract Counterparties") to the unexpired leases and executory contracts being assumed and assigned to the Buyer (the "Assigned Contracts'') setting forth: (i) the contract(s) and/or lease(s) that may be assumed by the Debtor and assigned to the Buyer; (ii) the name and address of the Contract Counterparty thereto; (iii) notice of the proposed effective date of the assignment (subject to the right of the Debtor and/or the Buyer to withdraw such request for assumption and assignment of the Assigned Contract(s) prior to the Closing); (iv) the amount, if any, determined by the Debtor to be necessary to be paid to cure and compensate for any existing default in accordance with sections 365(b) and 365(f)(2) of the Bankruptcy Code (the "Cure Amount"); and (v) the deadlines by which any such Contract Counterparty must file an objection to the proposed assumption and assignment of any Assigned Contract.

G. The service of such Assumption and Assignment Notice (i) was good, sufficient and appropriate under the circumstances of this Chapter 11 Case; (ii) provided such counterparties with a full and fair opportunity to object to such assumption, assignment, or transfer and to the proposed Cure Amount set forth in the Assumption and Assignment Notice; and (iii) was in compliance with the Bidding Procedures Order and applicable provisions of the Bankruptcy Rules and Local Rules. Accordingly, no other or further notice need be given in connection with such assumption, assignment, or transfer or with respect to the amount of Cure Payments.

H. As evidenced by the affidavits of service previously filed with this Court and as approved under the Bidding Procedures Order: (i) due, proper, timely, adequate and sufficient notice of the Motion, the Auction, the Sale Hearing, the assumption and assignment of the Assigned Contracts, the entry of this Sale Order, and the Sale has been provided to all parties-in- interest; (ii) such notice was, and is, good, sufficient and appropriate under the circumstances of this Chapter 11 Case, provided a fair and reasonable opportunity for parties-in-interest to object, and to be heard, with respect thereto, and was provided in accordance with sections 102(1), 363 and 365 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006, 9006, 9007 and 9014, and the applicable Local Rules; and (iii) no other or further notice of with respect to such matters is necessary or shall be required.
Business Judgment

I. The Debtor has demonstrated good, sufficient and sound business purposes and
justifications for, and compelling circumstances to promptly consummate, the Sale and other transactions contemplated by the Asset Purchase Agreement and the Transaction Documents, including, without limitation, the assumption, assignment, and/or transfer of the Assigned Contracts (collectively, the "Transactions") pursuant to sections 363 and 365 of the Bankruptcy Code, prior to and outside of a plan of reorganization, and such action is an appropriate exercise of the Debtor's business judgment and in the best interests of the Debtor, its Estate, and its creditors.
Good Faith of the Buyer;

No Collusion

J. The Buyer is not an insider (as that term is defined in section 101(31) of the Bankruptcy Code) of the Debtor.

K. The Buyer is purchasing the Purchased Assets in good faith, and is a good faith purchaser, within the meaning of section 363(m) of the Bankruptcy Code. The Buyer is therefore entitled to, and granted pursuant to paragraph 24 below, the full rights, benefits, privileges, and protections of section 363(m) of the Bankruptcy Code, and the Buyer has otherwise proceeded in good faith in all respects in connection with the Transactions in that, inter alia: (i) the Buyer recognized that the Debtor was free to deal with any other party interested in acquiring the Purchased Assets; (ii) the Buyer complied with the provisions in the Bidding Procedures Order; (iii) the Buyer agreed to subject its bid to the competitive bidding procedures set forth in the Bidding Procedures Order; (iv) all payments to be made by the Buyer and other agreements or arrangements entered into by the Buyer in connection with the Sale have been disclosed; (v) the Buyer has not violated section 363(n) of the Bankruptcy Code by any action or inaction; (vi) no common identity of directors or controlling stockholders exists between the Buyer, on the one hand, and the Debtor, on the other hand; and (vii) the negotiation and execution of the Asset Purchase Agreement and Transaction Documents were at arms' length and in good faith.

L. None of the Debtor, the Buyer, or any of their respective Representatives, has engaged in any conduct that would cause or permit the Asset Purchase Agreement or any of the Transaction Documents, or the consummation of the Transaction, to be avoidable or avoided, or for costs or damages to be imposed, under section 363(n) of the Bankruptcy Code, or has acted in bad faith or in any improper or collusive manner with any Person in connection therewith.

Highest and Best Offer

M. In accordance with the Bidding Procedures Order, the Asset Purchase Agreement was deemed a Qualified Bid (as defined in the Bidding Procedures Order) and the Buyer was a Qualified Bidder (as defined in the Bidding Procedures Order) eligible to participate at the Auction.

N. The Debtor conducted a marketing and auction process in accordance with, and has otherwise complied in all respects with, the Bidding Procedures Order. The marketing and auction process set forth in the Bidding Procedures Order afforded a full, fair and reasonable opportunity for any Person or entity to make a higher or otherwise better offer to purchase the Purchased Assets. The Auction was duly noticed and conducted in a non-collusive, fair and good faith manner and a reasonable opportunity has been given to any interested party to make a higher or otherwise better offer for the Purchased Assets.

0. As qualified by the Court's findings made on the record at the Sale Hearing, the Asset Purchase Agreement constitutes the highest or otherwise best offer for the Purchased Assets, and will provide a greater overall recovery for the Debtor's Estate than would be provided by any other available alternative. The Debtor's determination that the Asset Purchase Agreement constitutes the highest and best offer for the Purchased Assets constitutes a valid and sound exercise of the Debtor's business judgment. The Asset Purchase Agreement represents a fair and reasonable offer to purchase the Purchased Assets under the circumstances of this Chapter 11 Case. As qualified by the Court's findings made on the record at the Sale Hearing, no other Person or entity or group of entities has offered to purchase the Purchased Assets for greater economic value to the Debtor's Estate than the Buyer. Approval of the Asset Purchase Agreement and the relief requested in the Motion, and the prompt consummation of the Transactions contemplated thereby, is in the best interests of the Debtor, its creditors, its Estate and other parties-in-interest.

No Fraudulent Transfer; Not a Successor

P. The Asset Purchase Agreement and Transaction Documents were not entered into, and the Transactions are not being consummated, for the purpose of hindering, delaying or defrauding creditors of the Debtor under applicable Law, and none of the parties to the Asset Purchase Agreement or any of the Transaction Documents are consummating the Transactions with any fraudulent or otherwise improper purpose. The Purchase Price for the Purchased Assets constitutes (i) reasonably equivalent value under the Bankruptcy Code and the Uniform Fraudulent Transfer Act, (ii) fair consideration under the Uniform Fraudulent Conveyance Act and (iii) reasonably equivalent value, fair consideration, and fair value under any other applicable Laws of the United States, any state, territory or possession of the United States or the District of Columbia.

Q. Except as expressly set forth in the Asset Purchase Agreement with respect to the Assumed Liabilities, the Buyer shall have no liability, responsibility, or obligations of any kind or nature whatsoever for any Interest of or against the Debtor, or otherwise related to the Purchased Assets, by reason of the transfer of the Purchased Assets to the Buyer. The Buyer shall not be deemed, as a result of any action taken in connection with the Transactions, to:

(1) be a successor (or other such similarly situated party) to the Debtor (other than with respect to the Assumed Liabilities as expressly stated in the Asset Purchase Agreement); or (2) have, de facto or otherwise, merged or consolidated with or into the Debtor. The Buyer is not acquiring or assuming any Interest, except as expressly set forth in the Asset Purchase Agreement with respect to the Assumed Liabilities.

Validity of Transfer

R. Subject to the entry of this Sale Order, the Debtor has full corporate power and authority (i) to perform all of its obligations under the Asset Purchase Agreement and the Transaction Documents, and the Debtor's prior execution and delivery thereof and performance thereunder, is hereby ratified in full, and (ii) to consummate the Transactions. The Asset Purchase Agreement and Transaction Documents, and the Transactions contemplated thereby, have been duly and validly authorized by all necessary corporate action. No further consents or approvals are required for the Debtor to consummate the Transactions or otherwise perform its obligations under the Asset Purchase Agreement or the Transaction Documents, except in each case as otherwise expressly set forth in the Asset Purchase Agreement or applicable Transaction Documents.

S. As of the Closing Date, the transfer of the Purchased Assets to the Buyer, including, without limitation, the assumption, assignment and transfer of the Assigned Contracts, will be a legal, valid, and effective transfer thereof, and vests the Buyer with all right, title, and interest of the Debtor in and to the Purchased Assets, free and clear of all Interests accruing or arising any time prior to the Closing Date, except as expressly set forth in the Asset Purchase Agreement with respect to the Assumed Liabilities or Permitted Liens.
Section 363({) Is Satisfied


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Alana33
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December 7, 2015 11:31 am  

I hear there is a very long list of tax exemptions to Arclight.
Additionally, the 300 acres given to the VI Government, eliminates property tax income on that land and what does the VI Government end up doing with the land? Doubt they'll be able to sell that plus it might be enviroementally compromised.


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vicanuck
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December 7, 2015 11:37 am  

Of course there will be tax exemptions. Every municipality in N America gives tax exemptions to entice corporations to relocate to their jurisdictions. Why should the VI be any different? Its a very competitive world.


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Alana33
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December 7, 2015 11:41 am  

Yeah but you haven't seen the long list of all the exemptions.


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vicanuck
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December 7, 2015 11:44 am  

I have...I'm still not concerned. Pretty standard.


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Alana33
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December 7, 2015 11:48 am  

I think they're pretty much giving away the farm.


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Bombi
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December 7, 2015 12:03 pm  

I hope STX gets a cash infusion and in my opinion the deal is better that watching it rust. It's a bad economic time for oil so it sounds good to me.


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