Singapore oil giant files for bankruptcy amid spiraling losses

One of Asia’s largest independent oil traders, Singapore-based Hin Leong Trading, filed for bankruptcy protection at a court in Singapore on April 17, saying it failed to declare “about $800 million in derivatives losses over the years,” according to a Reuters report. The company is seeking a six-month moratorium on its roughly $3.85 billion debt load owed to 23 banks.

The company’s founder and director, Lim Oon Kuim, 77, was cited in the filing as taking responsibility for directing the finance department to conceal hundreds of millions of dollars in losses from appearing on the company’s financial statements.

The filing cites a collapse in oil prices and the coronavirus pandemic, which has hammered oil demand and pushed up costs for the company, as main reasons for the losses.

The company “suffered about $800 million in futures losses over the years but these were not reflected in the financial statements,” Lim said in the filing, adding that “In this regard, I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong.”

The company also sold some of the millions of barrels of refined products it had used as collateral to secure loans from its banks. As a result, the company now faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. That potentially means huge losses for the banks which provided Hin Leong Trading with billions in loans as the collateral they thought they have as a guarantee is no longer there.

HSBC and ABN Amro have biggest exposure

HSBC has the biggest exposure to the company at $600 million, followed by ABN Amro at $300 million. Three Singapore banks – DBS Group, OCBC Bank and United Overseas Bank – have a combined exposure of at least $600 million. DBS has the highest exposure at around $290 million, OCBC Bank is owed about $220 million and UOB lent $100 million.

Hin Leong was established in 1963 and has grown into one of Asia’s largest suppliers of ship fuel. Its subsidiary Ocean Tankers owns a fleet of more than 100 oil tankers of various sizes, making it one of the world’s largest.

The company’s sprawling empire also comprises Ocean Bunkering Services, one of Singapore’s top three marine fuel suppliers, as well as Universal Terminal, one of Asia’s biggest oil storage terminals, located on Jurong Island, which it co-owns with China’s state-owned oil giant PetroChina.

One of Asia's largest independent oil traders, Singapore-based Hin Leong Trading, filed for bankruptcy protection at a court in Singapore on April 17, saying it failed to declare “about $800 million in derivatives losses over the years,” according to a Reuters report. The company is seeking a six-month moratorium on its roughly $3.85 billion debt load owed to 23 banks. The company’s founder and director, Lim Oon Kuim, 77, was cited in the filing as taking responsibility for directing the finance department to conceal hundreds of millions of dollars in losses from appearing on the company’s financial statements. The filing...

One of Asia’s largest independent oil traders, Singapore-based Hin Leong Trading, filed for bankruptcy protection at a court in Singapore on April 17, saying it failed to declare “about $800 million in derivatives losses over the years,” according to a Reuters report. The company is seeking a six-month moratorium on its roughly $3.85 billion debt load owed to 23 banks.

The company’s founder and director, Lim Oon Kuim, 77, was cited in the filing as taking responsibility for directing the finance department to conceal hundreds of millions of dollars in losses from appearing on the company’s financial statements.

The filing cites a collapse in oil prices and the coronavirus pandemic, which has hammered oil demand and pushed up costs for the company, as main reasons for the losses.

The company “suffered about $800 million in futures losses over the years but these were not reflected in the financial statements,” Lim said in the filing, adding that “In this regard, I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong.”

The company also sold some of the millions of barrels of refined products it had used as collateral to secure loans from its banks. As a result, the company now faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. That potentially means huge losses for the banks which provided Hin Leong Trading with billions in loans as the collateral they thought they have as a guarantee is no longer there.

HSBC and ABN Amro have biggest exposure

HSBC has the biggest exposure to the company at $600 million, followed by ABN Amro at $300 million. Three Singapore banks – DBS Group, OCBC Bank and United Overseas Bank – have a combined exposure of at least $600 million. DBS has the highest exposure at around $290 million, OCBC Bank is owed about $220 million and UOB lent $100 million.

Hin Leong was established in 1963 and has grown into one of Asia’s largest suppliers of ship fuel. Its subsidiary Ocean Tankers owns a fleet of more than 100 oil tankers of various sizes, making it one of the world’s largest.

The company’s sprawling empire also comprises Ocean Bunkering Services, one of Singapore’s top three marine fuel suppliers, as well as Universal Terminal, one of Asia’s biggest oil storage terminals, located on Jurong Island, which it co-owns with China’s state-owned oil giant PetroChina.

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