United Refining Company of Warren, Pa., will pay $27 million in cash for all assets belonging to cash-strapped Metro Terminals and will assume any cure costs in connection with assumed contracts and leases, according to the latest filings to the New York Bankruptcy Court.
In addition, United is committed to hire at least 75% of Metro's employees. Among all bidders in the asset auction held earlier this week, United was the only bidder interested in buying Metro assets in its entirety. The others were after individual assets separately.
If the proposed sale to United falls through, the other back-up bidders in line to buy Metro assets include Castle Oil at $20 million in cash to buy Metro's terminal assets and a commitment to hire at least six of Metro's employees.
Before bidding all Metro assets, United had originally submitted a $2.9 million bid for Metro's Calverton terminaling facility.
Metro did not designate a back-up bidder for Metro Fuel business, which is included in the assets proposed to be sold to United Refining. A hearing at the Bankruptcy Court of Eastern District of New York is scheduled on Feb. 13 for the asset sale approval.
OPIS reported on Wednesday that United Refining had emerged as the winner of the auction for all New York fuel distribution and terminaling assets belonging to bankrupt Metro Terminals.
John Catsimatidis, chairman and CEO of the Red Apple Group Inc. and United Refining, told OPIS that the acquisition would be completed within the next two to three weeks.
United Riverhead Terminal Inc. (URT), an affiliate of United Refining, was initially interested in buying only the Long Island terminaling assets of Metro Terminals, but after arriving at the auction earlier this week, United Refining decided it was "a much better deal" to buy all Metro Terminals assets, he said.
Catsimatidis said that Metro's Calverton terminal, which is located next to United Riverhead Terminal in Long Island, will be merged together.
United plans to operate Brooklyn terminal separately from its Riverhead/Calverton terminaling assets. Also, United is happy to take over a 90%-completed biodiesel blending project at Metro in Brooklyn as United has already had that plan to build a similar plant in its long-term business strategy, he said.
Metro Terminals, a 70-year-old Brooklyn-based heating oil company, filed for bankruptcy on Sept. 27 in New York because of cost overruns and a warm winter in 2012.
Apart from its heating oil supply business, Metro has a new marine fueling dock facility at Newtown Creek in Brooklyn, and a new rail project to link up its Brooklyn and Long Island diesel and biodiesel distribution terminals.
In late 2011, Metro opened a 1.06-million-gal capacity biodiesel blending and distribution terminal at Enterprise Park at Calverton, N.Y.
At Calverton in Long Island, Metro has four fuel storage tanks, totaling 1.06 million gal. One tank holds 500,000 gal of diesel, and the second holds the same volume of No. 2 heating oil. The third tank is a grease accumulator tank that will store grease until it is shipped to the Brooklyn site for biodiesel production. Calverton also houses a biodiesel tank.
After completion of the Brooklyn project, Metro's storage capacity would have risen to 10.46 million gal from 9.46 million gal.
The top two creditors are Bayside Fuel Oil Depot and Hess.
The purchase of Metro Terminals of Long Island (Brooklyn & Calverton) would drastically expand United Refining's footprint in New York.
In November 2012, URT acquired Phillips 66's Riverhead, N.Y., marine petroleum terminal and associated assets.
"It (Riverhead terminal acquisition) permits us to diversify into a non cyclical fee-based business. The terminal itself is well located strategically; access to low-cost and reliable marine transportation is vital to the competitiveness of its customers in petroleum and petrochemical operations," Catsimatidis said last year after the acquisition of Phillips 66's terminal in Long Island.
"Riverhead allows access to high capacity deepwater marine facilities that will give them a cost advantage over other locations," he added.
United Refining said that delivered product can then be stored at the Long Island terminal and reloaded onto ocean-going barges for all parts of the East Coast; its primary business is the central and north Atlantic region.
A significant amount of the product is received by ship, stored and delivered by ocean-going barge and tankers, and a minimal amount is delivered by transport truck, primarily for heating fuel for eastern Long Island.
United Refining's Riverhead terminal is located on the North Shore of Long Island, N.Y., approximately 80 miles east of New York Harbor.
The facility encompasses 280 acres and has over 5 million barrels of petroleum storage capability. Most of the storage capacity is currently used for dirty products. The Riverhead marine terminal is utilized as storage and as a trans-shipment hub for crude, heavy fuels, diesel and gasoline, and the offshore marine platform is the only deepwater loading/unloading platform on the U.S. East Coast.
With an operating draft of 64 feet, the terminal's offshore platform routinely receives Suezmax vessels and is capable of handling VLCC tankers.
Besides the Riverhead terminal, United Refining operates a 70,000-b/d plant in Warren, Pa., and operates 362 c-stores located primarily in western New York and western Pennsylvania.