Loan tied to troubled St. Croix refinery plunges in value
A $440 million loan tied to the now-idled Limetree Bay refinery in St. Croix has lost nearly 30 percent of its value amid a serious cash crunch that could leave a number of U.S. mutual funds holding the debt with losses.
The loan is backed by revenue from oil storage operations on the 1,500-acre (600-hectare) complex on the Virgin Islands. But those operations lost their biggest customer this past month when the refinery said it would shut indefinitely because of financial problems and pollution woes that drew enforcement action from the U.S. Environmental Protection Agency.
Bid prices on the loan backed by Limetree Bay Terminals LLC have dropped below 70 cents on the dollar this week, down from a three-month high of 97 cents, according to Refinitiv data. The loan matures in 2024 and several mutual funds hold slices of it, according to filings with the U.S. Securities and Exchange Commission.
As a result of the closure, the storage and terminal operations will lose $52 million of expected operating revenue in fiscal 2021, according to analysts at Moody's Investors Service. The rating agency downgraded the loan to "Caa1" with a negative outlook.
The terminal stopped making payments to the refinery in mid-May after the EPA ordered all operations at the adjacent refinery to pause for a period of up to 60 days.
"Without the refinery as a customer, the expected turnaround in credit metrics and material excess cash flow generation in 2021 becomes unlikely," Moody's said in a June 28 research note.
(This story corrects capacity figure in 5th paragraph to 34 million instead of 32 million)
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