Cosco Shipping International, the ship services arm of China Cosco Shipping, has forecast a significant revenue hit from the collapse of Coastal Oil Singapore.
Sinfeng, a wholly owned subsidiary of Cosco Shipping International engaged in marine fuel supply and trading in Singapore and Malaysia, acquired 93% of its bunkers from Coastal Oil in value terms during the first half of 2018.
Since its reported filing for liquidation in mid-December, Coastal Oil has allegedly assigned some debts that are “not genuine” to a number of third-party commercial banks, which have demanded repayments by Sinfeng, Cosco Shipping International said in an exchange filing.
Cosco Shipping International has suggested it is seeking legal means to deal with the banks’ claims.
“Based on a preliminary assessment, the management of Sinfeng is of the view that the documents in relation to almost all of the alleged debts are not genuine,” the company said.
“Sinfeng is still in the process of conducting an investigation and seeking professional advice in respect of the aforesaid matters.”
Still, while not detailing the claims, the Hong Kong-listed company said group revenue would decrease significantly with Sinfeng taking the hit.
“However, in light of the insignificant profit contribution of Sinfeng, the board currently does not foresee any material adverse impact on the Group as a result of the liquidation of Coastal Oil Singapore,” the filing added.
According to Cosco reports, Sinfeng accounted for 69% of Cosco Shipping International’s HKD 4.79bn revenue and 1.2% of its HKD 217m pre-tax profit during January-June 2018.
Coastal Oil entered liquidation after a sharp fall in oil prices, with DBS Singapore among its creditors.
TradeWinds understands from shipbroking sources that its entire fleet was recently placed on the sales market.
Two of its ships, the 24,200-dwt products tanker Atalanta (built 2015) and the 5,500-dwt products tanker Coastal Neptune (built 2014), were arrested in Singapore by DBS last week.
