Limetree gets OK to tap DIP loan, despite affiliate lenders’ concern

By Sarah Lizee

Olympia, Wash., July 14 – Limetree Bay Refining, LLC received interim approval to access $5.5 million of a $25 million debtor-in-possession facility, according to a minute entry filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Late Tuesday, an informal group of lenders of non-debtor affiliate Limetree Bay Terminals, LLC objected to the financing motion. The group said its members hold more than 70% of the roughly $450 million senior secured term loan debt of Limetree Bay Terminals.

Some of the Limetree debtors are, collectively, Limetree Bay Terminals’ largest customer. Under two terminal services agreements, the terminal entities provide storage for the debtors’ petroleum products and services that allow the debtors’ refined products to be sold and transported to customers.

The lender group said the debtors have missed multiple payments to the terminal entities under the transition services agreements.

“As of the petition date, the debtors’ accrued obligations to the terminal under certain storage agreements totaled approximately $13 million, with approximately $11 million past due,” the lenders said.

“Additional storage fees under those agreements continue to accrue on a post-petition basis. However, the proposed DIP financing budget does not contemplate either current payment of past due amounts and provides for minimal ongoing payments to the terminal entities for those necessary storage services.”

The lenders said they should receive payment at the contractual rate for services that they are and will be providing to the debtors on a post-petition basis, and which give rise to administrative expense claims.

405 Sentinel LLC is the lender and administrative agent for the DIP financing, as previously reported.

The DIP facility will bear interest at 3% in cash and 9% in kind.

The company also received interim court approval to use the cash collateral of 405 Sentinel and its pre-petition secured parties.

Limetree Bay is based in St. Croix, U.S. Virgin Islands and is capable of processing around 200,000 barrels per day. The company filed bankruptcy on July 12 under Chapter 11 case number 21-32351.

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