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DeJongh Decries Senate's Rejection of Refinery Sale

In a radio interview Sunday, Gov. John deJongh Jr. said that rejecting a plan to sell the refinery digs a hole in the government’s budget and opens the territory up to potentially millions of dollars in liabilities if Hovensa sues and wins for back taxes.

"I’m extremely disappointed," deJongh said on WLDV 107.9 FM.

In September, Government House announced the tentative sale of the refinery, which closed in 2012, costing the Virgin Islands economy more than 2,500 jobs. It announced Atlantic Basin Refining Inc., a recently created V.I. company, had negotiated the purchase of the refinery. On Nov. 1, deJongh released a legislative proposal codifying the negotiated operating agreement for the refinery.

The operating agreement requires legislative ratification before the sale can be closed because it includes legislative action on tax breaks and other issues.

Many of the senators began expressing concern about the agreement’s provisions releasing Hovensa from all liability upon the sale and about the ability of ABR to pay for cleanup if the deal falls through, and they cited those same concerns Friday when voting to reject the plan.

DeJongh said the decision "has removed the possibility of the payment of $45 million in cash, that would have come from ABR’s purchase of the refinery from Hovensa."

"That is money we badly need to close our budget deficit," he said.

Hovensa is also claiming the territory owes it more than $200 million in tax refunds because it lost so much money the last few years of operation. DeJongh said Sunday he believed the vote to reject the operating agreement "has undermined our strategy to protect and defend the Virgin Islands from the lawsuit Hovensa will likely now bring for the massive income tax refund."

"As part of our negotiations we included a provision for mutual releases of obligations,” deJongh said. “We knew that Hovensa disagreed with us on the scope of the release they were providing. But it was a release that, in the view of our attorneys, covered all claims. It provided a defense that the senators who voted against the agreement apparently felt we did not need. Indeed we are now without a release from them and only the prospect of future litigation," he said

DeJongh said he would have a discussion with Governor-elect Kenneth Mapp and his team on the issues relating to possible litigation.

Addressing concerns that ABR had no financial resources of its own, but only hopes of getting loans, deJongh said Hovensa also had few resources and is legally distinct from its wealthy parent companies.

DeJongh said the initial payment at closing that would have provided the government with $45 million in cash "is one I am very certain they would be able to make."

While ABR would not be able to get financing until after the sale and after the agreement was ratified, deJongh said senators were wrong to think ABR would not be able to follow through.

"They thought that ABR did not have the equity or the financing but ABR showed them they had access to the financing. They just need the analysis that Samsung would have ultimately provided but you couldn’t get to the Samsung analysis unless we had an operating agreement," deJongh said.

But with the deal apparently dead in the water, deJongh said the government – and the incoming administration – would have to look at the various options that now exist.

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