Bidding on a Xihe Holdings-owned LR2 product tanker wrapped up on Friday, adding to a string of deals that have seen more than half of the company's fleet sold off.
The High Court of Singapore, which conducted the auction of the 108,900-dwt Ocean Pegasus (built 2009), has yet to reveal the outcome of the sale effort.
Officials at the Sheriff of Singapore’s office told TradeWinds that the result of the auction — held on Friday last week — would be announced once completed.
Industry watchdogs who have been following the disposal of the troubled former Lim-family controlled shipowner’s fleet said they expected a positive outcome.
Observers who have closely watched the Xihe sell-off have noted that the entities tasked with finding buyers for the ships have found no shortage of suitors.
The piecemeal nature of the sales have kept prices reasonably high, which is again expected to be the case for the Ocean Pegasus.
“There is strong demand for Xihe's ships from serious buyers, and the judicial managers and creditors made it clear from the outset that they were not going to let the ships go at fire-sale prices” said a shipbroking source who has been following the developments closely.
“Buyers know the lowball gambit is not going to work.”
In a judicial auction such as the one conducted for the Ocean Pegasus, it is up to the judge handling the case to determine whether the highest bid submitted is deemed acceptable.
Singaporean legal sources noted that the arresting creditor is often consulted for their input if no bids reach the minimum reserve price set for the auction.
Hamburg Commercial Bank (HCB) said it had the full support of Xihe Holding’s judicial managers when it arrested the ship in March against a $17.5m mortgage claim.
“They [HBC] are well aware that the tanker market is starting on the road to recovery so they are not going to want a high-spec, well maintained ship sell for much less than its market value,” the broker said.
Xihe executives always touted their ships as being built from the perspective of an oil trader, built to higher specs than off-the-shelf yard designs, with their efficiency further enhanced with higher-capacity pumps.
A pre-auction survey of the Ocean Pegasus revealed that despite not trading for over a year, the ship remained well maintained, crewed, and fit-for-purpose.
VesselsValue this week pegged a $19.6m market price on the ship.
Last month, Xihe’s judicial managers sold a slightly older, nearly identical LR2 tanker — the 108,900-dwt Ocean Taipan (built 2008) — to Stamford Shipping for $17m.
Slow & methodical
There were strong fears in the tanker market when the liquidation of the Xihe fleet first began in July 2020.
The worry was that 140 tankers of various sizes suddenly coming onto the market in a distress sale would cause asset prices to plummet.
Accounting firm Grant Thornton — Xihe’s judicial manager — elected instead to opt for a slower, more orderly disbanding of the fleet, spread out over many months, to avoid flooding the market with too many ships at one time.
Batches of vessels have been put up for sale, with most selling at prices reasonably close to their estimated market value. The company’s larger tankers, especially its VLCCs, have proven especially popular with the bigger names in the tanker sector.
Just over half of the Xihe fleet has now been sold, with most of the larger tankers gone.
The bulk of what remains is a batch of 16 MR2 product tankers and close to 40 small tankers with capacities ranging from 4,000 dwt to 16,500 dwt.
Family legal woes
Xihe founder and family patriarch Lim Oon Kuin has been left watching the dissolution of his fleet from the sidelines as he fights his own personal legal battle after being hit with numerous charges of fraud.
Lim's legal woes worsened on 24 June, when Singapore's public prosecutor filed an additional 105 charges against him, stemming from $2.23bn in allegedly fraudulent disbursements from his flagship oil trading company, Hin Leong Trading, potentially leaving banks with hundreds of millions of dollars in losses.
Lim was already facing 25 forgery-related charges filed in April.
In May Hin Leong's liquidators obtained a global court order for the seizure of Lim's assets together with those of his son and daughter that were estimated to be worth $3.5bn.
In June, the High Court of Singapore capped the family's spending at SGD 10,000 ($7,500) per week.
