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Charlotte Amalie
Thursday, March 28, 2024
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Hovensa Agrees to 14-Month Sale Plan

The owners of the Hovensa refinery have agreed to a 14-month sale process of the company’s facilities on St. Croix, according to the agreement announced Saturday evening by Gov. John deJongh, Jr.

The governor briefed members of the 30th Legislature Saturday afternoon on the agreement. Lt. Gov. Gregory Francis also participated in the meeting. The agreement must be ratified by the Senate before it takes effect, and the clock for the potential sale of the facilities begins at that moment.

DeJongh said in the Government House statement that he was pleased negotiations, which began in August, have concluded with Hovensa’s owners agreeing to submit to a sales process.

“I view this as a significant step forward towards our goal of seeing if we can find a new owner who will reopen the refinery, thus providing jobs on St. Croix and economic stimulus to our entire community," the governor said. "Our negotiations with the refinery’s owners have been long and difficult, but seeing if we can get the refinery reopened has been important to me and to many in our community."

DeJongh said attorneys for the refinery and government hashed out the agreement this week.

“Our agreement assures us that will retain some of the benefits presently in place, such as the continued sale of fuel from the Hovensa truck rack, even as the sale process goes forward. The agreement will also permit Hovensa to operate as an oil storage terminal during the sales process period,” deJongh said.

The pact is known as the Fourth Amendment Agreement. Government House provided a summary of its key terms, which include:

  • The sales process will begin upon the Senate’s ratification of the agreement;
  • The sales process will not exceed 14 months from the date ratified by the Senate;
  • Hovensa will make available storage for fuels sufficient to meet the needs of St. Croix through August 2019, or so long as Hovensa is operating an oil storage terminal;
  • Hovensa will make fuels available to the government and the public at its truck rack through March 2014, after which date Hovensa will assist the government in securing responsible third-party suppliers and operators;
  • Hovensa will invest a minimum of $500,000 annually in career technical and scholarship programs for so long as the terminal is owned by the company; and
  • Hovensa will provide the University of the Virgin Islands with access to the Hovensa Training School.

For its part the government agreed:

  • To suspend Hovensa’s obligation to bid on the WAPA fuel supply;
  • To reduce Hovensa’s obligations for payment in lieu of property taxes to $7 million annually commencing Oct. 1 for as long as Hovensa is operating an oil storage terminal but not later than September 2019, after which it will return to $14 million annually. If the refinery is not sold or if Hovensa ceases to operate an oil storage terminal or on before August 2019, whichever is earlier, Hovensa will make to the government a lump sum payment of such amount as is necessary for the government to recoup all payments foregone.

Terms of the agreement require that the sales process be managed by an investment banking firm which must retained by Hovensa’s owners no later than 10 days after the agreement is ratified by the Legislature.

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