The Pension Benefit Guaranty Corp. is assuming the defined benefit plan of Hovensa LLC, which is headquartered on St. Croix in the U.S. Virgin Islands and also owns a former oil refinery and an oil storage terminal there.
Unable to sell the operations, Hovensa is abandoning the pension fund as of Wednesday, the PBGC said in a statement.
The plan is 75% funded, with $127 million in assets and $169 million in benefit liabilities. The PBGC expects to cover $38 million of the $42 million shortfall.
Hovensa began shutting down the refinery in January 2012. In a statement at the time, the company said it had lost $1.3 billion in the previous three years alone, caused by weakened demand, new refining capacity in emerging markets and lower U.S. prices for natural gas. “We explored all available options to avoid this outcome, but severe financial losses left us with no other choice,” said Brian Lever, president and chief operating officer.