OW Bunker says it expects to be insolvent
Update 1 - Added OW Bunker owes 13 banks $750 million, support from Danske Bank and Nordea
Update 2 - OW Bunker has since been given until December 1 to present a restructuring plan [Read in Full]
Following yesterday's news of a $125 million fraud at its Singapore-based subsidiary Dynamic Oil Trading, OW Bunker today has announced that, regrettably, it has been unable to find a solution with the syndicate banks and has decided to file for commencement of in-court restructuring procedure in the subsidiaries O.W. Bunker & Trading A/S and O.W. Supply & Trading A/S at the probate court in Aalborg, Denmark.
"The main operational activities of the group are located in these companies, which are expected to be insolvent," the company wrote in today's statement.
"For the time being, the financial impact cannot be assessed, however, it must be assumed that the group's equity is lost."
it must be assumed that the group's equity is lost
OW Bunker said the purpose of the procedure is to establish an overview of whether a basis for continued operations of the companies can be established, including a basis for injecting further capital or other similar solution.
"In court restructuring procedure is aimed at debtors who are insolvent but where there is a chance that all or part of the debtor's business may be able to continue operations after the completion of a restructuring," OW Bunker wrote.
"The procedure is intended to provide a tool for management and creditors alike, offering the possibility of rescuing an insolvent business, and thereby preserving its assets, rather than proceeding straight to the filing of a bankruptcy petition."
OW Bunker Chairman Niels Henrik Jensen told Reuters it had retained the support of Danske Bank and Nordea, but a remaining 11 international banks withdrew their backing.
"The company is at risk of going bankrupt," he said.
OW Bunker owes 13 banks a total of $750 million, according to Reuters.
Yesterday, OW Bunker reported that it has been made aware of fraudulent activity committed by senior employees at DOT with preliminary findings putting the potential loss at around USD $125 million.
The bunker supplier said a review of its risk management contracts revealed a "significant risk management loss" and put its mark to market loss at around USD $150 million.
Earlier yesterday, NASDAQ OMX Copenhagen announced that trade in shares of OW Bunker had been placed on matching halt.