OW Bunker files for restructuring after fraud discovery

NOVEMBER 6, 2014 — Copenhagen, Denmark,  headquartered OW Bunker, which raised around $980 million in an IPO back in April, said today “that it must be assumed the group’s equity is lost.”

The company said it has filed to commence in-court restructuring procedure at the probate court in Aalborg.

The decision to file came a day after the company said it had  been informed about a fraud committed by senior employees in Singapore-based subsidiary Dynamic Oil Trading (DOT), with preliminary findings suggesting a potential loss of around $125 million.

It also said a review of OW Bunker’s risk management contracts had “revealed a significant risk management loss in addition to the loss of $24.5 million announced on October 23, 2014 … As of today, the mark to market loss is around $150 million.”

It said that its risk management contracts were being unwound and that Head of Risk Management and EVP Jane Dahl Christensen had been dismissed with immediate effect.

OUT: Head of Risk Management and EVP Jane Dahl Christensen

OW Bunker had offered customers a number of options to guard against marine fuel price risk. Its risk management solutions included “a broad range of financial and trading instruments such as physical fixed price contracts, swaps, caps, collars and three-way options.”

Today the board said it had not been able to find a solution with the syndicate banks and that “the purpose of the in-court restructuring procedure is to establish an overview of whether a basis for continued operations of the companies can be established, including a basis for injecting further capital or other similar solution. For the time being, the financial impact cannot be assessed, however, it must be assumed that the group’s equity is lost.”

According to OW Bunker, the in court restructuring procedure is aimed at debtors who are insolvent but where there is a chance that all or part of the debtor’s business may be able to continue operations after the completion of a restructuring. The procedure is intended to provide a tool for management and creditors alike, offering the possibility of rescuing an insolvent business, and thereby preserving its assets, rather than proceeding straight to the filing of a bankruptcy petition.