OW Bunker: DOT Removed from IPO Prospectus 1 Month Before Issue

by Ship & Bunker News Team
Tuesday March 3, 2015

Documents have surfaced suggesting that all mention of OW Bunker's Singapore subsidiary, Dynamic Oil Trading (DOT), was removed from the group's listing prospectus a month before it was issued, Denmark's DR reports.

The documents are part of a package of documents pertaining to the preparations for OW Bunker's initial public offering (IPO), which was internally referred to as "Project Oak."

DOT is said to have been omitted because its growth strategy, described by private equity backers Altor in 2013 as "aggressive," may not have fitted with the risk appetite of potential investors.

Johnny Madsen, Partner at investment managers Dansk FI, told DR that it was a disaster that Dynamic Oil Trading had not been mentioned in the final prospectus as its business differed markedly in risk and earnings from the rest of the group.

Looking at the whole affair, the impression was that the omission was intentional to make the IPO an easier sell to investors as DOT did not not fit into the picture of a low-risk company, he added.

In December, Danish media reported that DOT occupied five pages in a presentation to potential industry buyers, Vitol, in 2013.

In November, OW Bunker filed for bankruptcy following the announcement of a $125 million loss at DOT, described at the time as a "fraud," and a $150 million "risk management" loss at the parent company.

The revelations come alongside news that investment bankers had advised the Project Oak team that OW Bunker's prospectus should include comment on the group's speculative "risk management" activities, but none was ultimately made.

Suggestions have been made that Carnegie and Morgan Stanley could be legally liable to those who relied on the prospectus.