The family behind GP Global is offering creditors some $65m cash plus other assets in a restructuring plan for their troubled bunkering, refining, and trading group.
According to a copy of the plan obtained by TradeWinds, Goel family interests in India would be sold to provide $65m cash. That would be paid over three years, and the family would also sign over personal real estate properties estimated to be worth between $1.7m and $8.8m.
The confidential report concentrates on imminent sales of the key assets of GP Global, mainly the Fujairah and Hamiriyah storage terminals and the Inner Harbour Terminal (IHT) with its pipeline connection to the group's UAE refinery.
"GP is seeking to attract interest from large global terminal operators who may be interested in acquiring both [Fujairah and Hamiriyah] assets together," restructuring officials wrote in the confidential report.
"IHT and [the] refinery are also being marketed collectively on the basis that a new 2.8 km pipeline between IHT and the refinery plant is currently being constructed."
In a statement provided through a GP Global spokesperson, chief restructuring officer Rod Sutton said the details of the report are subject to confidentiality clauses and could not be shared. But he disclosed some outlines of his recommendations.
Sutton, an advisor at FTI Consulting, was hired in July to devise and carry out a plan for Gulf Petrochem FZC, the Goel family-controlled holding company that controls dozens of entities collectively referred to as GP Global.
He said in the statement that initial feedback from key stakeholders "seems positive" and also characterised reaction from buyers as "encouraging".
"It is in the creditors' best interest to allow GP Global to undertake a complete business restructuring exercise and not opt to liquidate. The business restructuring includes sale of the company’s state-of-art world-class assets at right valuation," Sutton said.
The Goel family controls a network of about 60 subsidiaries and joint ventures in 20 countries through holding company Gulf Petrochem FZC. Founders Sudhir Goyel and Ashok Goel hold 27.27% of shares and sons Manan and Prerit Goel the rest.
No scheme of arrangement
Gulf Petrochem FZC is headquartered in Sharjah's Hamiraya free trade zone and most assets and operations are domiciled in the UAE, which subjects any plan to the limitations of UAE bankruptcy law.
A protective composition plan, the UAE's nearest answer to a UK scheme of arrangement, is not advisable in the case of Gulf Petrochem, according to the confidential report. That's because it could make the assets subject to an unpredictable court-controlled process. The problem is that Gulf Petrochem ceased payments to creditors for a period exceeding 30 consecutive working days.
Meanwhile, further bank credit is out of the question. And refinancing or debt-for-equity swaps are out because of "accounting irregularities" Sutton's team found in the group's trade finance practices.
That leaves liquidation or else a mutually agreed restructuring, they claimed in the report.
Under a restructuring, creditors would agree within four weeks to a standstill period of three to six months to enable an orderly sales process. Sales of terminals and other core assets would be completed within the next four weeks and other assets at intervals intervals over the next six months, while the company continues to operate.
Sutton would oversee operations in order to "preserve and protect the residual value in the assets, maintain [the] going-concern position of applicable businesses, [and] demonstrate to creditors that assets are being properly managed", according to the confidential report.
Interim payments to creditors would be made "as and when funds permit during the course of the restructuring".
Risks of a distressed sale
In the statement Sutton provided to TradeWinds, he emphasised the attractions of GP Global for potential buyers.
"Investors have indicated a high level of interest in GP in its totality or in a collection of its strategic assets, which are currently doing a decent amount of business," he wrote. "Operations at the two storage terminals are running at full capacity and those in Africa are performing well.
"With such a strong pipeline, FTI has kicked off the sale process and has received an encouraging response from interested parties. These are very sensitive negotiations and we will report on progress as the process evolves," Sutton wrote in his statement to TradeWinds.
But in his confidential plan, the urgent emphasis is more on avoiding the impression of a rushed sale.
"It is essential that GP’s assets are monetised via an orderly and structured marketing/sales process to achieve the best price reasonably obtainable and avoid any perception within the market that the assets are being sold as part of any distressed sales process," Sutton wrote in the confidential restructuring plan.
