Limetree Bay Energy is preparing for a bankruptcy filing by its oil refinery in the U.S. Virgin Islands after environmental contamination caused the company to indefinitely extend a shutdown of the plant, Bloomberg News reported. The refinery on St. Croix has been seeking so-called debtor-in-possession financing that will help fund a restructuring in bankruptcy court. Limetree Bay has been in talks with creditors to address its debt after the shutdown of the 200,000-barrel-a-day refinery left it unable to raise additional financing. Operational mishaps in May contaminated drinking water, sent oil droplets raining down on residents of the island and produced heavy odors. In the same month, the refinery missed a tank usage payment to Limetree Bay’s terminals in St. Croix. That’s now squeezing the finances of the terminal business, and S&P Global Ratings slashed its credit grades on Limetree Bay Terminals — an entity affiliated with the refinery that has a $446 million term loan — by five levels last month to CCC-. Limetree’s financial challenges date from at least 2009 and its environmental woes to at least 2005, when it was accused by environmental regulators of contaminating drinking water and damaging wildlife and the marine environment. The refinery planned to close for good in 2012 when it was owned by Hess and PDVSA, the Venezuelan state oil company. It filed for bankruptcy in 2015 and was sold to private owners.
