INDEPENDENTS
Headwinds still strong
The ghost of OW Bunker still haunts the sector as another major company hits choppy seas
T
he collapse of OW Bunker may now be four years astern but when, in early June, the big New York-listed independent Aegean Marine Petroleum (AMP) made the shock announcement that it was taking a US$200m hit over questionable transactions the prospect of a similar disaster seemed all too real. With many physical suppliers badly hit by the OW Bunker failure the collapse of another big independent was the last thing the bunker industry needed. However in AMP’s case a lifeline has been thrown though the company is not out of the legal woods yet. AMP’s shares dived nearly 75% when it told the US Department of Justice and Securities and the Exchange Commission that it had written off US$200m on transactions that may have been “without economic substance”. The company, founded by Greek tycoon Dimitris Melissanidis had appointed three US activist hedge fund managers, owning about 15% of AMP, to its board after they agreed to drop shareholder lawsuits against the company. The Financial Times reported that AMP’s audit committee had discovered about US$200m in questionable transactions related to four counterparties, dating back to at least 2015. AMP’s market capitalisation fell immediately to less than US$30m from US$115m before the announcement.
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A statement said: “Based on the preliminary findings of the review, the Audit Committee believes that approximately $200 million of accounts receivable owed to the Company at December 31, 2017 will need to be written off.” It added: “The transactions that gave rise to the accounts receivable may have been, in full or in part, without economic substance and improperly accounted for in contravention of the company’s normal policies and procedures.” AMP said that a “number of individuals” it believed to have been involved in the questionable transactions had been “terminated or placed on administrative leave pending the outcome of the investigation”. While the spectre of another hugely damaging collapse hung over the sector moves were ongoing to save the company. In early July AMP announced that it had entered into an MOU with one of the world’s largest independent commodities and energy players, Mercuria Energy Group, to support AMP’s US and global revolving credit facilities and “to explore a global strategic partnership”. “We look forward to further developing our relationship with Aegean and providing the flexibility to execute a strategy that enhances the Company’s operations and positions the Company for long-term success,” AMP Chairman and independent director of the Board, Donald Moore, said,
“As part of the announced strategic review, the new leadership at Aegean has, in short order, brought forward an opportunity to completely redefine and optimise the Company’s capital structure, enhance near term liquidity and position the Company for a dynamic partnership with one of the world’s largest privately held integrated energy and commodity groups. We are extremely pleased to enter into this Agreement with Mercuria and look forward to working with them on a broader relationship, for the benefit of our respective stakeholders.” He added: “Importantly, the Agreement provides for immediate credit support from Mercuria for the benefit of Aegean’s banks, customers, suppliers, and logistics providers, putting the strength of one of the world’s largest independent energy and commodity companies behind Aegean. We look forward to further developing our relationship with Aegean and providing the flexibility to execute a strategy that enhances the Company’s operations and positions the Company for long-term success,” said Magid Shenouda, Mercuria’s Global Head of Trading. Mercuria committed to provide a US$1 billion trade finance facility also provide increased liquidity to Aegean of not less than US$30m, adding flexibility to Aegean’s operations. World Bunkering AUTUMN 2018