Limetree Bay Ventures LLC: Update

We hear that Limetree Bay Ventures LLC , the owner of the troubled refinery in St Croix – which is bankruptcy – will be seeking to sell the operation. Jeffries haves been engaged and a target date for a closing has been – optimistically – set for mid-October.

The BDC Credit Reporter noted this quote: “According to Bloomberg, existing creditors have the option of using the debt owed to them to make a bid on the refinery business”. Of course, lenders always have that option and many bankruptcies these days use that process. In this case we can’t imagine who else but the existing lenders might be interested in taking on this highly polluting, highly controversial hot potato.

This is important because the only BDC lender to Limetree – FS Energy & Power – already has $300mn invested in the company. Should the BDC – and other lenders involved – seek to become the owners of the refinery that could result in the likelihood of having to advance substantial more funds just to get the business operational again. Furthermore, there’s the risk of litigation from the U.S. government and others to contend with.

On the other hand, if the existing lenders are a last resort and decline to step up, a complete write-down of FS Energy’s investment is likely. Plus, there’s no certainty that there might not be litigation anyway. This places the BDC in a difficult position, but one management must have been preparing for. We’ll be interested to see in the weeks ahead if the existing lenders do actually fashion a bid to purchase the refinery.