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Exclusive: Private equity firm bids for Canada’s idled Come-by-Chance refinery

Private equity firm Cresta Fund Management has offered to buy a majority stake in North Atlantic Refining Ltd (NARL), owner of the idled Canadian 135,000 barrel-per-day Come-by-Chance refinery, according to a letter reviewed by Reuters.

The Dallas-based firm said in a letter dated Jan. 22 it would look to convert the refinery to renewable fuel production. The Newfoundland refinery has been shut since March, one of numerous refineries across the United States and Canada that have halted operations due to coronavirus-induced demand destruction.

Several refiners since then have announced plans to convert their operations to renewable fuels production to remain viable as both nations try to reduce emissions.

Canada’s Clean Fuel Standard (CFS) will require carbon-intensity reduction targets set for each fuel starting in 2022 and is projected to increase renewable fuel demand.

The refinery, operated by NARL and New York-based investment firm Silverpeak, is actively searching for a new owner.

“We are engaged in conversations with several parties from around the globe. The process of attracting an investor or partner to a large, commercial business like North Atlantic is very detailed, requiring extensive due diligence over a period of many months,” said an NARL spokeswoman, declining to comment further.

Cresta Fund Management declined to comment.

“We have a track record of successfully acquiring similar businesses and have the market knowledge and resources necessary to smooth the diligence process and ensure a successful transition,” Cresta said in the letter.

In January, the Canadian province of Newfoundland and Labrador agreed to give NARL a total of C$16.6 million ($13 million) to keep the refinery idled while the owner seeks a new capital partner.

Come-by-Chance has been looking for a new owner since Irving Oil backed away from a purchase and share agreement in October.

The trading unit of Russia’s Lukoil plans to remove crude oil it has stored at Come-by-Chance, Reuters reported last week. Lukoil’s Litasco unit is its primary crude supplier.

From Reuters | Issued February 2, 2021