EMEA News
OW Bunker: Speculative Activities Deliberately Omitted from IPO Prospectus
New documents suggest that mention of OW Bunker's speculative oil trading activities were deliberately omitted from the company's listing prospectus issued last year, Danish media reports.
According to a newly surfaced memo, the issue of how to present OW Bunker's speculative activities, labelled "risk management," was raised among those preparing the listing prospectus ahead of its initial public offering (IPO) last March.
The memo was sent to members of Project Oak, the alias given to OW Bunker's IPO preparations, which was said to include OW Bunker management, its private equity backers Altor, lawyers Kromann Reumert, and the company's bankers.
The memo, entitled "Project Oak - perspectives on public disclosure" is said to suggest a statement must be made to explain how OW Bunker's "risk management" business fed into the company's profits, of which an average of a third are understood to have derived from the practice between 2009 and 2013.
In addition, the memo is understood to point to the sensitivity of presenting the speculative business to pension funds, banks, and ordinary investors.
However, no mention was made of "risk management" in the actual prospectus issued.
Søren Friis Hansen, professor of corporate law at Copenhagen Business School (CBS), is said to have reviewed the documents and said that the failure to mention any information on risk management indicated that its omission was intentional.
Hansen also noted that the IPO team was aware that the risk management details were important to investors, that they had been asked about them, and that they wrote that they have to disclose such information.
"But it was not done," he said.
Not the First
This is not the first document said to suggest OW Bunker and Altor colluded to hide the company's risk management activities.
In December it was reported that an email dated November 27, 2012 between OW Bunker management and Altor discussed differing methods of accounting presentation regarding the company's "risk management" activities.
OW Bunker filed for bankruptcy in November 2014 following the announcement of a $150 million "risk management" loss and a $125 million loss at Singapore subsidiary Dynamic Oil Trading (DOT).
The latest memo, which has recently come to light, is said to have been prepared by the two investment banks working on the OW Bunker IPO, Carnegie and Morgan Stanley.
There are suggestions the two banks may now be legally liable to those who have lost money as part of the collapse of OW Bunker.
The revelations come alongside news that all mention of DOT was removed from the final prospectus one month before it was issued to investors.
