Ocean Tankers’ court-appointed manager, Ernst & Young (EY), is formulating a restructuring plan for the embattled Singapore shipmanager.
The professional services giant's Singapore unit is due to start discussions with company founder Lim Oon Kuin and his family on their interest in participating in any restructuring of part or all of the Ocean Tanker business, according to court documents filed by EY on Tuesday.
The objective is said to be to preserve some or all of the business of Ocean Tankers and the restructuring of the firm’s debt.
Sufficient cash
Ocean Tankers is still said to have cash of about $20.4m and that should enable it to continue trading for at least the next three months, EY said.
“This should be sufficient time for the interim judicial managers to formulate a potential restructuring plan,” the report said.
EY has put forward two restructuring options to the Lim family. They include a proposal by PricewaterhouseCoopers Advisory Services (PwC) — the judicial manager for Ocean Tankers parent Hin Leong Trading — for the oil trader to merge with other companies in the Lim family's umbrella, including Ocean Tankers, to create an integrated petroleum trading platform. The other merger candidates are the Xihe Group, Universal Group Holdings and oil terminal Universal Terminal.
The other option is for Ocean Tankers to continue with its ship chartering, ship management and related services by working with parties related to the fleet, including Xihe. Xihe owns the bulker of Ocean Tankers' oceangoing vessels and provides them on bareboat charters.
EY said it would like Ocean Tankers to retain a role as the commercial and technical manager of the fleet, with Xihe providing advance funding for such services.
“The ongoing chartering business of Ocean Tankers would thus be preserved and it would also be less disruptive and align the interests of Ocean Tankers and Xihe Group,” EY said.
The shipowner's oil storage and lubricant processing business can be a stand-alone unit, EY said. It has reportedly received expressions of interest from third-party investors.
Irregularities
EY said its investigations found irregularities in the conduct of Ocean Tankers’ affairs.
The company alleged that Ocean Tankers would discharge cargo at Universal Terminal at the direction of Hin Leong, without requiring the oil trader to present either an original bill of lading or a letter of indemnity.
EY stated that Ocean Tankers’ fleet is at the risk of arrest with 51 admiralty writs filed in Singapore against vessels chartered to the company.
Ocean Tankers, which sought judicial management in May, faces exposure to potential claims of about $2.67bn stemming from its dealings with Hin Leong.
Its total assets are estimated at $386m, while total liabilities amount to $392m.
