UPDATE 1-Hovensa faces bankruptcy, owes $1.86 billion to owners
(Adds details on financing, advisers)
HOUSTON, Sept 17 (Reuters) - Bankruptcy proceedings over the future of the Hovensa refinery were slated to open in federal court in the U.S. Virgin Islands on Thursday, two days after it filed for protection, saying it owes $1.86 billion to owners Hess Corp and Venezuela's PDVSA.
Since the 500,000-barrel-per-day refinery was shuttered in 2012 on mounting losses, Hovensa has been struggling to pay its debts and obligations. Those include a $40 million environmental fine filed by the Islands' government and notes issued in 2012 to pay back its owners.
Hovensa's owners have told the bankruptcy court that they agreed to sell the company's terminal and storage facilities to ArcLight Capital Partners LLC affiliate Limetree Bay Holdings LLC for $184 million.
Under that agreement, subject to court approval, Limetree would take on some of Hovensa's debts, which are 10 times greater than the price tag. Hovensa said investment bank Lazard Ltd was advising it.
A previous attempt to sell the whole plant and restart the refinery failed last year after the Islands' Senate rejected the plan and expressed doubts about that buyer, Atlantic Basin Refining.
In February, the owners decided to idle the refinery's 32-million-barrel storage terminal, which Hovensa had rented out.
In its court filings, Hovensa said it owed its owners more than $1.86 billion, including interest.
The company also said it had a loss of $1.3 billion between 2009 and 2011. Its island location and outdated power infrastructure left it hamstrung with high costs. Continuación...