The interim judicial manager of Xihe Holdings has launched the sales of seven vessels linked to the family of Lim Oon Kuin, founder of collapsed oil trader Hin Leong Trading and affiliated shipping firm Ocean Tankers.
The step by Grant Thornton is expected to help the Singaporean magnate’s creditors recover debts, but add downward pressure on secondhand tanker prices amid weak rate environments.
Sources with knowledge of the matter told TradeWinds the accounting firm has appointed Clarksons and Arrow Shipbroking as exclusive brokers for three VLCCs: the 318,000-dwt Tai San (built 2009) and Tai Hung San (built 2010) and 319,000-dwt Pu Tuo San (built 2011).
Four product tankers — the 37,300-dwt Ocean Victory (built 2002), 50,100-dwt Bei Jiang (built 2009), 109,000-dwt Ocean Trader (built 2008) and Ocean Pegasus (built 2009) — are also on the sales block.
Interested buyers can inspect them from 21 September and submit their bids eight to 10 days later.
“Most of the vessels will be made available for physical inspection in Singapore. There are a few vessels which may have to be inspected in other ports like Rotterdam,” one of the sources said.
“Xihe Holdings will consider potential en-bloc opportunities for its vessels.”
In an emailed statement, Paresh Jotangia — a Singapore-based partner of Grant Thornton — said the interim judicial management process intends to preserve value for Xihe Holdings’ stakeholders.
“This involves assessing potential go-forward plans for Xihe Holdings, which will need to be considered by creditors if the court subsequently places Xihe Holdings into judicial management. These vessels have been selected with these potential plans in mind,” Jotangia said.
TradeWinds approached Xihe Holdings, Clarksons and Arrow Shipbroking for comment, but none responded by TradeWinds' presstime.
The VLCCs and LR2s were constructed by Shanghai Waigaoqiao Shipbuilding, the MR2 by SLS Shipbuilding, and the MR1 by Hyundai Mipo Dockyard.
The combined value of the ships is about $195m, according to VesselsValue. But court-driven sales tend to be at below-market levels.
Falling asset prices
“Usually, asset sales like this are pretty ugly,” said a Singapore broker. “If people are aware of more to come, they can’t be paying up.”
Tanker asset prices have been softening in recent months amid weak earnings prospects, with oil demand expected to be plagued by the coronavirus pandemic for the near future.
Xihe Holdings is part of the Lim-founded Xihe Group, which includes Xihe Capital and some shipowning offshoots.
Group firms, which together own 136 vessels, were previously the main tonnage providers for Ocean Tankers.
Faced with debts totalling $4.05bn, plus heavy trading losses, Lim has been forced to place Hin Leong and Ocean Tankers under judicial management this year.
Some $1.17bn-worth of tankers and newbuildings linked to Ocean Tankers emerged as secondhand sales candidates in June, but potential buyers were driven away after Lim’s creditors began to serve writs on the ships.
In late July, Xihe Group sought to break away from Lim by appointing a new, independent management board and opening what it described as “consensual” talks with its main lenders.
Lim and his children withdrew from the management team, even though his brother Kenny was appointed interim chief executive.
Xihe Group also said it had cancelled all its charter agreements with Hin Leong and Ocean Tankers.
But the restructuring suffered a blow in mid-August when the Singapore High Court granted an application by OCBC Bank to put Xihe Holdings and four special-purpose vessel-owning vehicles under supervision by Grant Thornton.
According to a brokers’ memo seen by TradeWinds, the seven vessels being sold are still technically managed by Ocean Tankers.
