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Sat, April 18, 2020 – 2:14 PM
With no luck with creditors and facing mounting difficulties, Singapore’s oil giant Hin Leong Trading (HLT), and its sister company Ocean Tankers, sought 23 lenders’ leniency on Friday when they sought judicial protection against credit actions to ensure their “survival ” “
In a letter to lenders obtained by The Business TimesHLT Director Evan Lim Chee Meng said the company faced a “real threat” of legal or insolvency proceedings or “compliance measures” that would undermine its debt restructuring efforts and jeopardize HLT’s position. like a going concern.
HLT, Asia’s largest oil trader, is burdened with sizable debts of some $ 3 billion and is facing a major crisis as oil prices have been devastated by the Covid-19 outbreak and a price war between the big oil companies.
Founded by discreet tycoon Lim Oon Kuin, whom many in the industry describe as a “workaholic,” the company said it was “forced” to seek a debt moratorium after “numerous demands” for payment by banks and “numerous accompanying calls and email correspondence”.
“HLT urgently and critically needs to utilize all of its resources and management capacity to stabilize its management, business and operations to the extent possible and to work with its creditors and advisers on the proposed debt restructuring,” said Evan Lim, son of the group’s founder, in the letter dated April 17.
Talks with bank lenders and an informal steering committee (ISC) “unfortunately” did not result in an agreement for a “blackout,” he said, adding that there was also no certainty that such an agreement was possible. In that note, he explained that the company could not continue without any protection against credit action.
HLT will work closely with PwC to protect and preserve its assets and cash. If the majority of bank lenders oppose your request for a debt moratorium, you will instead apply for injunction or interim injunction, he continued.
In addition to HLT, the Hin Leong Group’s expanding empire includes Ocean Tankers, one of the world’s largest oil tanker owners; Ocean Bunkering Services: one of the top three providers of marine fuel in the city state; and the Universal Terminal, a massive commercial storage facility on Jurong Island, which is jointly owned by Chinese oil giant PetroChina.
The ripple effects of the problems on the group’s flagship HLT are showing up in its other major businesses.
Following HLT’s application in the Singapore High Court for the moratorium order (under section 211B of the Companies Act), Ocean Tankers has also followed suit as HLT’s “financial hardship” has exposed the owner of the tanker to responsibilities.
This is because HLT has designated ships that are chartered or operated by Ocean Tankers for most of its operations, Ocean Tankers chief executive Evan Lim said in a separate letter to lenders that BT obtained.
Ocean Tankers has issued bills of lading for operations that have “multiple parties in the sales or bank chain,” including HLT bank lenders.
“Some of these charges under these bills of lading may have been discharged against instructions or letter of indemnity issued by HLT. (Ocean Tankers) may be responsible, as the issuer of bills of lading, to the legal holders for the loss of the charges
“Although (Ocean Tankers) may resort to HLT for compensation against such liability, it is unlikely that HLT is currently in a position to comply with such compensation,” added Lim.
As a result, he said the company faces a “real and immediate risk” that bill of lading holders may issue lawsuits and arrest their vessels. Already, ICICI Bank, one of HLT’s bank lenders, has issued lawsuits against two of the Ocean Tankers vessels.
Ocean Tankers, he said, also plans to undertake its own debt renewal.
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