Anita Gabriel at The Business Times reports that hammered by a US$4 billion debt pile and an ongoing probe by Singapore’s white-collar crime buster, the city-state’s largest oil trader Hin Leong Trading (HLT) was granted interim judicial management on April 27 by the High Court.
According to BT, Goh Thien Phong and Chan Kheng Tek of PricewaterhouseCoopers Advisory Services (PwC) have been appointed as interim judicial managers.
They have eight weeks to file a preliminary report which will include an assessment on whether the commodity trader can be restructured or rehabilitated, BT says.
The virtual hearing at the Singapore High Court was earlier scheduled for April 30 after the trading firm filed an application for judicial management (JM) in mid-April, but the session was brought forward to April 27 instead following requests from some lenders, BT understands.
BT relates that HLT had earlier sought a debt moratorium from the court but has since withdrawn the application after its bank lenders pushed for it to go down the JM route.
Sources said the lenders were more comfortable with the interim judicial managers taking charge of the company’s affairs after it came to light that HLT had hid from its financial statements some US$800 million in losses incurred from futures trading, the report adds.
The troubles at HLT, which is part of a massive empire comprising one of the world’s largest owners of oil tankers and Singapore’s third-largest bunkering firm, have roiled the oil and gas sector amid a crippling pandemic-led oil crisis.
“It’s shock and horror, really. Everything happened so fast and nobody has had much time to process it,” said a representative for one of over 23 creditors exposed to the group.
The fallout has been widespread, with claims coming in fast and furious.
On April 27, a wholly-owned power generation unit of Sembcorp Industries launched legal proceedings to assert ownership over gasoil reserves that are Universal Terminal – a commercial storage facility on Jurong Island that is part-owned by the Hin Leong Group. It cited the possibility that the gasoil reserves designated for Sembcorp Cogen may be subject to competing claims by one or more third parties for the move.
About Hin Leong
Hin Leong Trading (Pte.) Ltd. provides petroleum products and transportation services. The Company offers oil, lubricants, grease, and diesel products, as well grants storage, terminalling, trucking, and marine logistics services. Hin Leong Trading serves customers globally.
Hin Leong Trading and shipping unit Ocean Tankers (Pte.) Ltd. filed for court protection from creditors on April 17, 2020, as the former struggles to repay debts of almost US$4 billion.
Hin Leong posted a positive equity of US$4.56 billion and net profit of US$78 million in the period ended October 31, according to the people, who asked not to be identified as the matter is sensitive, according to Bloomberg News.
But Hin Leong told its creditors this month that total liabilities reached US$4.05 billion as of early April, while assets were just US$714 million, leaving a hole of at least US$3.34 billion, according to screenshots of the presentation to a group of bankers seen by Bloomberg News.
The balance sheet of the company showed no equity at all as of April 9, 2020, and warned that “figures obtained from the company are subject to verification,” Bloomberg News added.
As reported in Troubled Company Reporter-Asia Pacific on April 24, 2020, The Financial Times said that Hin Leong is seeking to appoint PwC as an independent manager to run the business as it pursues a debt restructuring of almost $4 billion. The company will withdraw the bankruptcy protection filing it submitted on April 17 and instead ask Singapore’s High Court to appoint PwC as a third party to run the company, a process known as judicial management.