By Laila Kearney
NEW YORK (Reuters) - Real estate developer Hilco Redevelopment Partners has entered into a $240 million agreement to purchase the Philadelphia Energy Solutions oil refinery, which was the largest and oldest on the East Coast, according to court documents on Wednesday.
Chicago-based Hilco submitted the winning bid, which includes an escrow amount of $30 million, in an auction last week for the Philadelphia site, documents filed with the U.S. Bankruptcy Court for the District of Delaware show.
The sale still needs to be approved by the bankruptcy court, and Los Angeles-based developer Industrial Realty Group, LLC, was selected as the backup bidder, the documents show.
The plan is scheduled to be submitted to the court for approval on Feb. 6.
PES filed for bankruptcy on July 21 and put its 335,000-barrel-per-day plant up for sale a month after a fire and explosions destroyed part of the refinery. With PES's closure, more than 1,000 workers were laid off, including 640 local United Steelworkers members.
Hilco, which has acquired 5,000 acres (2,023 hectares) in North America, specializes in redeveloping obsolete industrial sites, dimming the prospect that the PES complex will be revived as an oil refinery.
Philadelphia Mayor Jim Kenney said in a statement that while the city expects challenges and years of work ahead, it is optimistic Hilco will develop the more than 1,300-acre site in a way that is more environmentally friendly and contributes to the regional economy.
“We welcome the selection of Hilco Redevelopment Partners as the winning bidder for the refinery site," Kenney said.
City officials met with bidders during last week's auction and were briefed on the track records of the various parties, but they were not given specific details of the proposals.
Hilco did not respond to requests for comment on its plans for the South Philadelphia site, which has been used to store and process hydrocarbons for about 150 years.
However, a stakeholder who was briefed by Hilco representatives in the days leading up to the auction said the company intended to use part of the site for light industrial purposes, including storage.
More than a dozen groups showed initial interest in buying PES, but only one publicly stated intentions to revive the site as an oil refinery at full capacity.
A sale to a real estate developer, either Hilco or IRG, does not preclude former bidders from leasing space on the site, according to two sources familiar with other proposals for PES.