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Silverpeak rejects Origin International’s bid to purchase Come By Chance oil refinery

Company says offer to buy North Atlantic would not benefit Newfoundland and Labrador long-term

The owner of the idled Come By Chance oil refinery has rejected an American company’s offer to buy it.

Silverpeak, owner of North Atlantic Refining Ltd. (NARL), issued a statement about Origin International’s bid late Thursday afternoon. The company said Orgin’s bid was “not in the best interests of our stakeholders or the long-term benefit of our employees and the people of Newfoundland and Labrador.” Silverpeak said it had informed the company what it would require in order to “undertake further discussions.”

“We will continue our diligent efforts to find a sustainable solution for the refinery and the province of Newfoundland and Labrador,” the statement from Silverpeak concluded.

Origin, a privately-owned recycler of waste hydrocarbons with operations in America and Europe, made a previous pitch to purchase NARL and recently submitted a new letter of intent (LOI) to Silverpeak in an attempt to acquire the company. The LOI was submitted shortly after Irving announced it was walking away from a deal announced in May that would have seen the New Brunswick company buy NARL.

Newfoundland businessman Dean MacDonald, one of the investors linked to Origin International’s potential purchase of NARL, found Silverpeak’s reasons for rejecting the bid somewhat odd.

“One was they questioned our financial capacity,” he told The Telegram. “We’ve provided letters to government from our bank, so that’s kind of bogus. I think they know its bogus. We clearly had financial capacity.

“They want to know our ability to run the plant. I mean, Origin does this for a living. I have an oil and gas company that maintains refineries out in Western Canada. From our perspective, those don’t seem to be very big hurdles for us to get over. We’re not really sure what the problem is. If there’s anything more specific than that, hopefully they’ll be transparent and let us know.”

Asked whether there would be another bid coming from Origin, MacDonald said he could not say either way.

“I don’t know, to be quite frank with you,” MacDonald said. “We know that our bid is as good as previous bids they’ve received and we know we have the financial capacity, we have the technical expertise. We’re kind of scratching our head. It doesn’t really make sense to us. Maybe they’ll be prepared to explain that in more detail to people.”

Origin responds
In a statement released to media, Origin International said it still felt the offer made to Silverpeak for NARL and its assets was a competitive one.

“We have appropriate financial backing,” the company said in its statement to media. “We have shared this information with the government of Newfoundland and Labrador. We would encourage Silverpeak to tell us along with the people of Newfoundland and Labrador what are the specific issues they would like addressed. It is a time for transparency and openness. The future of the refinery, its employees and the regional economy hangs in the balance.”

Origin CEO Nicholas Myerson declined to comment on Silverpeak’s rejection of the company’s offer when contacted early Thursday evening, referring The Telegram back to the company’s statement. In an interview that morning with The Telegram, he emphasized the need to get the refinery — currently in warm idle mode to help protect infrastructure — up and running again.

“We feel that a refinery is like a car,” he said. “A car doesn’t like to be stuck in the garage and not running … In the oil industry, it’s well known when you have a refinery and you’re not running it, it starts to deteriorate. Especially when you’re in a climate such as Newfoundland and Labrador, where it does get cold during the winter and there’s salt in the air due to the proximity to the ocean.

“And the longer this asset stays down for, the less likely, in our opinion, it can technically be restarted, even though it is on warm idle. For us, time is of the essence. Time is of the essence for the sake of the steel on the site, and it’s also for the essence of the workers who are currently unemployed and sitting at home. We know they want to get back to work, and we feel that you have to act soon in order for this refinery to have a viable pathway of being able to be restarted.”

Oil struggles
The NARL refinery in Come By Chance was shut down in mid-March as a safety precaution due to the COVID-19 pandemic, and it has not been restarted due to a struggling oil economy.

Origin had hoped to finalize a purchase before the end of 2020 and have refinery employees return to commence restart work in mid-January 2021. It would have then aimed to have environmental analysis and detailed remediation cost estimates in by mid-April and the refinery restarted by June 1.

The company was pitching to make the refinery part of a paradigm shift towards a more sustainable future that would include co-processing a range of waste and biowaste feedstocks. A waste oil collection system would have become a new part of the business, and Origin would look to wind energy as a means to lower utility costs for the refinery.

Industry, Energy and Technology Minister Andrew Parsons says he still believes there is room to find a deal between Silverpeak and Origin, despite the rejection of Origin’s first offer for the refinery.

“These are very difficult, complex, very important deliberations. These parties need to be able to speak to each other,” said Parsons.

“I can’t say that I like where we are, in terms of how the process is unfolding, but I also think there’s a lot of the process left yet to unfold.”

Parsons says he thinks the parties at the negotiating table should stay there and stop negotiating in public.

“Origin has been out very publicly, which is their right. Silverpeak has responded in a way that indicates that, you know, the beginning parts of this negotiation have not been successful, but there’s still very much life to the process,” said Parsons.

“I did see after, on Twitter, that there was a response to that and my personal opinion is that everybody would be better served communicating in private, in boardrooms, through telephone calls, and in actual negotiations. I don’t think there’s going to be a lot solved by negotiating in the media.”

Parsons says there’s lots happening behind closed doors that he could comment on, but he doesn’t want to jeopardize the negotiations ongoing right now.

“I would love to be able to go out and say what I know or say what I see, but that is not going to help the process,” he said.

“That’s my only concern right now, is the process.”

Source: The Telegram | This text was excerpted from the media outlet cited on November 13, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.