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HK’s Brightoil plans Zhoushan oil terminal asset sale amid restructuring

Tuesday, 22 January 2019 | 12:00

Hong Kong-listed oil and gas company Brightoil Petroleum (Holdings) Limited late Friday said it is in discussions to potentially sell or secure investors for its Zhoushan oil storage and terminal facilities as it proceeds with restructuring plans.

According to the company’s website, the Zhoushan oil storage and terminal facilities have 13 berths that can accommodate vessels up to 300,000 dwt and a total oil storage capacity of about 3.16 million cu m.

Brightoil’s intended asset sales come at a time when Zhoushan port is emerging as an attractive bunkering destination in China.

The port became the biggest supplier of bonded bunker fuel in China in 2018 with estimated sales of 3.59 million mt, up 97% year on year. The surge was attributed mainly to a mid-year government policy change, S&P Global Platts reported earlier.

China’s commerce ministry in July 2018 approved a new policy for blending and exporting in the Zhejiang Free Trade Zone, enabling locally registered oil companies to mix imported raw materials to produce tax-free fuel oil that could be sold as bonded bunker fuel or re-exported.

“A lot of interested players are taking up positions in Asia and China ahead of IMO 2020,” an industry source said of the International Maritime Organization’s looming tighter sulfur limit rule on marine fuels.

Zhoushan was developing into an important shipping hub primarily because of China’s recent emphasis on cleaner marine fuels amid stricter environmental rules in international shipping, as well as in its designated waters, he added.

Another industry source said: “Zhoushan is opening up and a lot of trading companies are showing interest.”

However, he noted Zhoushan’s sales were still minuscule when compared with ports such as Singapore or Ulsan.

Meanwhile, Brightoil said it is also presently in discussions with financial institutions for refinancing its oil tankers.

The company in November said it had entered into charter agreements with Shell International Eastern Trading Company in relation to its subsidiary Brightoil Shipping Singapore Pte Ltd’s VLCCs and Aframax tankers.

CREDITOR CLAIMS

Brightoil’s restructuring, which includes a debt reorganization and new financing, comes at a time when the company faces creditor claims it estimates amount to around $250 million.

The bunker industry globally is grappling with increased competition amid tightening margins, which have been under sustained downward pressure since the 2014 slump in crude prices.

The industry came under further pressure later that year with the unexpected bankruptcy of Danish trader OW Bunker — a situation that left shipowners and oil producers reassessing counterparty risk, with some deciding to trim their use of traders and brokers as a result. The situation has been precarious since then.

Brightoil’s plans under consideration include “renewal of existing credit facilities, takeover of existing loans by certain key financiers and/or disposal of assets of the group for raising capital to pay off a portion of the existing debts and enhancing liquidity of the group,” the company said in a statement.

On January 8, Broad Action Limited filed a winding up petition in Hong Kong against Brightoil in relation to an alleged unpaid early redemption of about $42 million under the conditions of unsecured redeemable convertible bonds due in 2018 that were issued by the company in November 2015, Brightoil said.

“Through friendly consultation, pursuant to a settlement, Broad Action Limited and the company have filed a consent summons at court for the withdrawal of the petition,” Brightoil said.

Last year, two creditors also filed winding up petitions in Singapore against the company’s subsidiary, Brightoil Petroleum (S’Pore) Pte Ltd, or BOPS.

On December 13, BOPS applied for a moratorium under section 211B of the Singapore Companies Act to restrain legal action or proceedings against BOPS.

The moratorium has since been extended until March 31, 2019, Brightoil said.

Meanwhile, Brightoil’s shares have been suspended from trading on the Stock Exchange of Hong Kong since October 2017 after it delayed publishing the group’s results for the fiscal year ended June 30, 2017.
Source: Platts

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