OW Bunker: Rosenmeyer Revelations a Boost for Damages Claim, Says Danish Shareholders Association

Niels Mengel, chairman of the Danish Shareholders Association, says information on alleged events in 2008 should have been in the IPO prospectus.

Niels Mengel, chairman of the Danish Shareholders Association, says a potential claim for damages against OW Bunker management, and those behind its IPO, has been given a boost by reports from earlier this week alleging that the now bankrupt supplier and trader was brought to the brink of bankruptcy back in 2008 as a result of a collapse in oil prices, Denmark's Dagbladet Børsen reports.

Ship & Bunker reported Tuesday that former OW Bunker risk manger Kenneth Rosenmeyer says he lost OW Bunker some $45 million when the price of oil collapsed after hitting its all time high in July 2008, with the company only able to survive after it managed to raise around $25 million by selling options on approximately 500,000 tonnes of oil.

Mengel says OW Bunker's IPO prospectus stated that the business was not based on oil price speculation, and "now we have a situation where we see that the decline in oil prices almost cost them" the business.

"This information should definitely have been in the [IPO prospectus]."

The 2008 incident appears to closely mirror events surrounding OW Bunker's bankruptcy last fall when a collapse in oil prices left it with an estimated $150 million "risk management" loss, and at the same time it declared it had discovered a $125 million fraud at its Singapore-based subsidiary Dynamic Oil Trading (DoT).

While the IPO prospectus states that, "Our business has proven resilient to changes in macroeconomic conditions, oil and marine fuel prices and shipping rates," it also says that "Significant changes in the market price of marine fuel that are not hedged or passed through to customers could have a material adverse effect on our business, financial condition and results of operations."

Last week Morten Schwartz Nielsen, president of the association OW Bunker Investor, said that lawyers representing 3,500 former shareholders have recommended they pursue a claim for damages as deficiencies in OW Bunker's prospectus were so numerous that it could be deemed deficient in its entirety.