EMEA News
Red October: OW Bunker Was on the Brink 3 Weeks Before Bankruptcy
New documents have revealed that failed fuel supplier OW Bunker was on the edge of bankruptcy some three weeks before the event actually occurred, but the information was withheld from the general public, Danish media reports.
Panicked executives are said to have met three separate times on October 16, 2014 for crisis meetings that they dubbed "Red October," working on ways to salvage the company.
It was reported that management had recently found out that the company had suffered a large hedging loss involving a large amount of oil that had been purchased in the Black Sea just before oil prices collapsed.
The company had purportedly stopped being able to pay its bills, with staff having been told by top management to quietly stop payments.
Minutes of the meetings as released by Danish media reveal that top level management, including CEO Jim Pedersen, risk chief Jane Dahl Christensen, and CFO Kent Larsen had agreed to keep the matter among a group of "insiders" while considering, and then discarding, the idea of going to banks for more liquidity.
The notes also reveal added pressure as U.S. investment bank Jefferies began demanding margin calls twice a day instead of once.
The group then allegedly agreed to postpone any notice to the Copenhagen Stock Exchange or shareholders, and the company's subsequent third quarter report released on October 23, 2014 also did not fully reflect OW Bunker's dire situation.
The company eventually revealed a loss of $150 million from its risk management practices, plus a loss of $125 million at Singapore subsidiary Dynamic Oil Trading (DOT) it said resulted from fraud, which was quickly followed by the company's bankruptcy.
