A judge on Monday approved Philadelphia Energy Solutions' prepackaged plan for Chapter 11 bankruptcy, setting the stage for the troubled South Philadelphia oil-processing plant to relaunch under new ownership no later than April 10.
U.S. Bankruptcy Court Judge Kevin Gross in Delaware approved the plan, which provides for $260 million of new capital and restructures debt. Owners of about $525 million in notes due this month will extend $417 million of debt to come due in 2022, and exchange the remainder for 75 percent equity in the company. Credit Suisse Asset Management and Halcyon Capital Management will become the largest shareholders.
The refinery's current owners, Carlyle Group and Energy Transfer Partners LP, will see their stake shrink to a combined 25 percent minority share.
The 335,000-barrel-a-day refinery, the largest on the East Coast, employs 1,100 people and about 500 contractors. Current management, led by chief executive Gregory G. Gatta, will remain in place.
The company blamed its financial demise on the soaring price for renewable energy credits, called RINs, which cost the company about $217 million last year, its greatest expense after crude oil costs.
Under the reorganization plan, the U.S. Environmental Protection Agency agreed to allow PES to shed about half of its $467 million in outstanding costs to comply with the Renewable Fuel Standard. The Clean Air Council on Monday challenged EPA's authority to forgive the refinery's obligations.