The parent company of Ocean Tankers Pte has applied to the Singapore High Court for a six-month moratorium on debt payments following the disclosure its subsidiary, Ocean Bunkering Services, has ceased bunker deliveries
Hin Leong Trading Pte Ltd (HLT) is seeking a Chapter 11-style arrangement to suspend repayment of a total of US$3Bn of debt held by 23 banks in the Singapore region.
HLT is the parent company of Ocean Bunkering Services (OBS), a prominent bunker supplier in Singapore. OBS ceased fuel deliveries last week, the first indication to many outside its group of lenders that all was not well financially in the HLT group.
HLT is the parent of Ocean Tanker Pte*, which owns and operates 113 vessels including tankers ranging in size from 1,000-dwt bunker barges to 318,000-dwt VLCCs, according to VesselsValue.
Ocean Tankers’ fleet
According to a report by press agency Reuters, founder and director of HLT, Lim Oon Kuin, a Singaporean in his 70s widely known as O K Lim, had instructed the finance department of HLT not to report US$800M of losses from trading in futures. The collapse of the crude oil price and the disruption of oil demand from the Covid-19 pandemic exposed the risk and caused the group’s trade finance suppliers to reassess their risk and call in loans.
The application for the Chapter 11-style stay on creditors protects HLT from legal action for 30 days while the court decides if it will grant the six-month debt repayment extension.
The financial implosion of HLT comes at a time when tankers, especially VLCCs are enjoying very firm earnings for trading and storage. The average age of the VLCCs in the Ocean Tankers Pte fleet is nine years old. Since the beginning of April 2020, the value of this age of VLCC has increased by over 1%. In the current tanker market, there will be no shortage of buyers should Ocean Tankers’ VLCCs come on the market.
*Not to be confused with Michalis Ionnidis’ company Ocean Tankers Holdings of Cyprus.
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