Brightoil creditor claims amount to US $250 million, potential debt reorganisation
Hong Kong listed Brightoil Petroleum (Holdings) Limited (the ‘company’ and together with its subsidiaries, collectively the ‘group’) on Friday (18 January) issued a statement on the Hong Kong Stock Exchange (HKSE) regarding potential debt reorganisation.
“The company is currently assessing the financial position of the group and the impact of claims made by some creditors against the Group,” it said.
“Based on a preliminary assessment made by management of the company, the total creditor claims amount to approximately USD250 million.
“The management of the company considers that the group has sufficient cash flow to maintain its normal operation, while it would require new funding to be received from the potential debt reorganization or otherwise to satisfy all the creditor claims.”
The board notes that work in relation to the potential debt reorganisation is currently being actively pursued by the group.
“Under the guidance and coordination of the People's Bank of China and following the principles of mitigating risks and supporting enterprise development, a committee led by a key financier of the group is in discussion with the group to advance the formulation of the debt reorganization plans,” it says.
“It is anticipated by the management of the group that debt reorganization or new financing can be arranged after the due diligence which is in progress and further discussions with the group.
“The 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.”
Brightoil further adds that suspension of trading of its shares has also put pressure on the group's ability to secure financing and limited the group's access to capital for business and operations.
“To protect the group's business from creditors' claims, including winding up petitions against the company or its subsidiary, the group is taking steps to pursue the debt reorganization, engaging in negotiations with creditors, and pursuing legal protection as advised,” it states.
Meanwhile, Brightoil says the winding up petition filed by Broad Action Limited on 8 January 2019 against the company in the High Court of Hong Kong has been dropped.
“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,” it updates.
The winding up petition was in relation to an alleged unpaid early redemption of approximately US $42 million under the terms and conditions of the unsecured redeemable convertible bonds due 2018 issued by the company on or around 19 November 2015.
Over in Singapore, the company notes the High Court of Singapore granting Brightoil Petroleum (S’Pore) Pte. Ltd. (BOPS) an extension of a moratorium under section 211B of the Singapore Companies Act until 31 March 2019.
“The group is also negotiating with other creditors which have issued statutory demands against the company and/or commenced legal actions against Brightoil Shipping Singapore Pte. Ltd., another indirect wholly-owned subsidiary of the company, with the view to exploring settlement options and seeking creditors' support to reorganize the group's debts,” it updates.
Moving forward, the group notes it has been working towards increasing liquidity.
In December 2018, the group and CNOOC reached agreements for a total amount of approximately USD700 million in financing and capital support.
It is currently in discussions with potential purchasers or investors for the intended sales of assets and/or shareholding of Zhoushan Oil Storage and Terminal Facilities, and in discussion with financial institutions for refinancing of its oil tankers.
“The management of the company believes that the debt reorganization, the sale of assets, or refinancing would provide the necessary liquidity to allow the group to protect its business, meet the creditor claims, and pursue future business opportunities,” it concludes.
Trading in Brightoil’s shares on HKSE has been suspended since 3 October 2017 pending the publication of the results Announcements, and will remain suspended until further notice.
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Photo credit: Brightoil Petroleum (Holdings) Limited
Published: 18 January, 2019
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