Aegean Marine Petroleum Network's need to write off $200m as a result of suspected fraud may ultimately turn into more business for competitor World Fuel Services.
"We believe this is a crippling blow for ANW," Seaport Global analyst Kevin Sterling wrote today in a note to clients.
"Selling bunker fuel is a capital-intensive business, and receivables are a lifelong and major asset ... and if the receivables are bad then bank lines of credit can dry up and customers can leave."
World Fuel, a bunker reseller, may gain market share with Aegean "severely weakened" as the distressed company sold 6% of about 280 million metric tonnes supply in 2017, he wrote.
"The marine market has been unusually challenging for World Fuel, and this may be just what the doctor ordered," he wrote.
Emails to Aegean and World Fuel were not immediately returned.
World Fuel's annual earnings per share could go up $0.03 to $0.05 if it were able to increase volume and pricing, he said.
"For now, we are maintaining our 2018 and 2019 EPS estimates of $1.95 and $2.30, respectively, but our numbers could have an upward bias if a disruption were to occur," he wrote.
Sterling told TradeWinds that Aegean's future most likely consists of filing for bankruptcy and then selling its assets, which include about 60 ships and 15 terminals worldwide.
"They're done," he said.
Since Monday's market close, Aegean's shares dropped 73% to $0.78 but have come back 22% to $0.86 as of mid-morning Wednesday.
The company, which has a market cap of $31.5m, had an adjusted net loss of $19.6m, $1.6bn in total assets and available cash of $93.8m for the fourth quarter.
'Time will tell'
Gerry Van Geyzel, chief executive of US online bunker platform ClearLynx, said the entire bunker industry seems to be troubled, pointing to OW Bunker's 2014 collapse.
"Banks are probably asking what's wrong with this industry," he told TradeWinds.
Regarding Aegean's fate, he said: "I think time will tell."
Adrian Tolson, senior partner with 2020 Marine Energy, said Aegean's future is dim but it may still be able to straighten itself out.
"Once you've lost confidence in the market, it's hard to redeem yourself," he said.
"Hopefully they can right the ship."
An exit by Aegean may benefit World Fuel and other competitors but it's too early to tell, he said.
"The benefits will be determined along the supply chain," he said.
