Lindsey Oil Refinery sale "hopefully" agreed in next two weeks
"Advanced discussions with more than one party" ongoing
The special managers overseeing the sales process for Lindsey Oil Refinery are “hopeful” of a sale agreement in the next two weeks. Recent correspondence between FTI Consulting representatives and all refinery staff, seen by the LDRS, has updated employees on the bid process and security of remaining jobs at the refinery.
The independent Official Receiver was appointed by a court on June 30, along with FTI Consulting as special managers, to oversee Prax Group companies that were in charge of the refinery. Over 120 workers were let go at the end of last month, on the basis that none of the offers for the site would see a return to refining operations in the near term.
FTI’s letter to staff states the bid process for the refinery site “remains highly competitive”. It also says, “We are hopeful that we can conclude a legally binding agreement within the next two weeks”.
It comes as one bidder has put forward their “comprehensive proposal” to the Department for Energy Security and Net Zero (DESNZ), and another interested group has expressed a degree of frustration with the process so far. Martin Vickers MP has also raised the refinery issue once more in Parliament.
Majority of workers expected to be employed beyond January 31
FTI Consulting’s update to refinery staff states it is expected the majority of remaining workers will remain employed beyond January 31. Staff that remain employed at the refinery are guaranteed their jobs until January 31.
This is the minimum retention period, but the majority of staff are expected to stay beyond, as is also consistent in a scenario of wind-down of the site. The decision to make redundant a third of refinery workers last month is described as “unfortunately unavoidable”. FTI’s update states the redundancies were made because there are “no credible proposals that sees refining return to the site in at least the next 12 months”.
The update also details an extra potential payment to staff on redundancy or sale of the business. Refinery workers have been already guaranteed a retention bonus equivalent to three months’ salary. They will now potentially get an additional one month pay at the point of redundancy or business sale, dependent on achieving certain milestones.
‘Advanced discussions’ with more than one party
FTI Consulting’s update to staff states it is in “advanced discussions with more than one party” over the sale of the refinery business. “The sales process remains highly competitive,” it states, before adding it is unable to provide further detail due to confidentiality reasons.
The special managers also advise that, whoever is the successful bidder, there will be a period between the exchange of legally binding contracts and completion, due to regulatory and operational requirements.
Temple Pershing Mining Company (TPMC) and partners are keen to acquire the refinery as a going concern. An expression of interest was submitted on September 1, but the company has expressed frustration with the lack of progress in having discussions.
It met with Mr Vickers and Baroness Rachel Maclean on October 29 to discuss this. “We call for stakeholders to initiate conversations with us, to enable a proposal to be developed that meets the needs of all parties,” said TPMC’s CEO Simon Robinson, who is from Lincolnshire originally, after this meeting.
The Insolvency Service has repeatedly stated the Official Receiver is committed to exploring the best possible outcome. “To do so, each bid is being considered with care, due diligence and on an equal footing.”
The Marc Amram Consortium has announced it has been able to submit a “comprehensive proposal” to DESNZ on resuming refinery operations. The submission forms part of an offer in which the consortium commits to covering all creditor obligations and ongoing operational costs.
“This proposal is about revitalising a cornerstone of British industry,” Mr Amram said, adding he believed they were “only days away from a positive outcome”. He also expressed thanks to local politicians for engaging with them. “We would like to sincerely thank Richard Tice, Andrea Jenkyns, Martin Vickers, Rob Waltham, and members of the Lindsey Oil Refinery staff who have worked closely with us.
“Their backing and shared commitment to securing the refinery’s future have been instrumental in reaching this stage.”
Mr Vickers brought up the refinery once more in Parliament on November 5. He asked Deputy PM David Lammy for assurance of Government backing if a bid for the whole site passes due diligence tests.
Mr Lammy said he could not from the Dispatch Box. But he promised to set up a meeting with the relevant minister.
All four times Mr Vickers has spoken in the House of Commons in the last three weeks have concerned Lindsey Oil Refinery. He described Mr Lammy’s reply as “rather negative”.
“However, I can assure residents that I will continue to put pressure on ministers to secure the future of the site. If a viable option is on the table that retains production, then surely the government would want to back that.”