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Singapore giant oil trader Hin Leong said to have failed to declare $1.14 billion losses
SINGAPORE (BLOOMBERG, REUTERS) - The son of the legendary oil trader and founder of Hin Leong Trading (Pte) Ltd said the Singapore company had suffered about US$800 million (S$1.14 billion) in losses from futures trading that weren’t reflected in its financial statements, according to people with knowledge of the matter.
Lim Chee Meng, the only son of Lim Oon Kuin, said he was unaware of the losses suffered over some years and his father had instructed Hin Leong’s finance department to omit them from its financial statements, according to the people with knowledge of an April 17 email sent by the shipping arm of Hin Leong, Ocean Tankers (Pte) Ltd, notifying recipient parties of proposed moratorium proceedings.
Neither the son nor the father could be reached for comment on Sunday (April 19). Nobody responded to calls or emails to Hin Leong or Ocean Tankers seeking comment. A spokeswoman for Rajah and Tann, one of Hin Leong’s advisers, said the firm is unable to comment because the matter is before the court.
Hin Leong and Ocean Tankers both filed for court protection from creditors on Friday as the former struggles to repay its massive debts.
It’s said to owe US$3.85 billion to 23 banks, with HSBC Holdings having the biggest exposure at US$600 million, followed by ABN Amro at US$300 million.
Three Singapore banks — DBS Group, OCBC Bank and United Overseas Bank — have a combined exposure of at least US$600 million. DBS has the highest exposure at around US$290 million, OCBC Bank is owed about US$220 million, and UOB lent US$100 million, The Business Times reported earlier.
The Monetary Authority of Singapore has been in touch with the banks on their exposures, according to a report by the Financial Times.
It was not immediately clear what led to Hin Leong’s financing issues but the coronavirus pandemic has led to an unprecedented slump in fuel demand and has hammered oil prices, making it difficult for trading firms to make a profit.
The trader’s financial distress has rocked the tightly-knit trading community in Singapore, one of the world’s most important oil markets and its biggest ship fueling hub. It’s raising speculation that the privately-held company could be the latest casualty of the historic collapse in oil prices triggered by the coronavirus.
Privately-held Hin Leong posted a positive equity of US$4.56 billion and net profit of US$78 million in the period ended October 31, according to the people, citing the email, which was signed off by Lim Chee Meng - also known as Evan Lim - and his sister Lim Huey Ching.
Bloomberg first reported Hin Leong’s financial difficulties April 10 after some lenders had pulled credit lines from Hin Leong amid concerns over its ability to finance its debts.
Lim Oon Kuin, known to many in the industry as OK Lim, will be resigning from all executive roles in Hin Leong, the Xihe Group and related companies as of April 17, according to the people, citing the email. He will also step down as director and managing director of Ocean Tankers.
Hin Leong was established in 1963 and has grown into one of Asia’s largest suppliers of ship fuel, or bunkers. Ocean Tankers owns a fleet of more than 100 oil tankers of various sizes, makiing it one of the world’s largest.
Its sprawling empire also comprises Ocean Bunkering Services - one of Singapore’s’s top three marine fuel suppliers - and Universal Terminal, one of Asia’s biggest oil storage terminals, loacted on Jurong Island, which it co-owns with China’s oil giant PetroChina.
Both Hin Leong and Ocean Tankers have filed for protection from its creditors under Section 211B of Singapore’s Companies Act. The filing, under section 211(B) of the Singapore Companies Act, automatically provides companies with a 30-day moratorium protection and allows them to apply for further extension which is subjected to the court’s approval.
Hin Leong could apply for an extension of six months to a year, one of the sources familiar with the matter said.
“(Moratorium) means protection against liquidation against the company and it’s usually done to cover the guarantor of the company against bankruptcy,” the second source said.
“It means creditors must have been very close to starting enforcement.”
SINGAPORE (BLOOMBERG, REUTERS) - The son of the legendary oil trader and founder of Hin Leong Trading (Pte) Ltd said the Singapore company had suffered about US$800 million (S$1.14 billion) in losses from futures trading that weren’t reflected in its financial statements, according to people with knowledge of the matter.
Lim Chee Meng, the only son of Lim Oon Kuin, said he was unaware of the losses suffered over some years and his father had instructed Hin Leong’s finance department to omit them from its financial statements, according to the people with knowledge of an April 17 email sent by the shipping arm of Hin Leong, Ocean Tankers (Pte) Ltd, notifying recipient parties of proposed moratorium proceedings.
Neither the son nor the father could be reached for comment on Sunday (April 19). Nobody responded to calls or emails to Hin Leong or Ocean Tankers seeking comment. A spokeswoman for Rajah and Tann, one of Hin Leong’s advisers, said the firm is unable to comment because the matter is before the court.
Hin Leong and Ocean Tankers both filed for court protection from creditors on Friday as the former struggles to repay its massive debts.
It’s said to owe US$3.85 billion to 23 banks, with HSBC Holdings having the biggest exposure at US$600 million, followed by ABN Amro at US$300 million.
Three Singapore banks — DBS Group, OCBC Bank and United Overseas Bank — have a combined exposure of at least US$600 million. DBS has the highest exposure at around US$290 million, OCBC Bank is owed about US$220 million, and UOB lent US$100 million, The Business Times reported earlier.
The Monetary Authority of Singapore has been in touch with the banks on their exposures, according to a report by the Financial Times.
It was not immediately clear what led to Hin Leong’s financing issues but the coronavirus pandemic has led to an unprecedented slump in fuel demand and has hammered oil prices, making it difficult for trading firms to make a profit.
The trader’s financial distress has rocked the tightly-knit trading community in Singapore, one of the world’s most important oil markets and its biggest ship fueling hub. It’s raising speculation that the privately-held company could be the latest casualty of the historic collapse in oil prices triggered by the coronavirus.
Privately-held Hin Leong posted a positive equity of US$4.56 billion and net profit of US$78 million in the period ended October 31, according to the people, citing the email, which was signed off by Lim Chee Meng - also known as Evan Lim - and his sister Lim Huey Ching.
Bloomberg first reported Hin Leong’s financial difficulties April 10 after some lenders had pulled credit lines from Hin Leong amid concerns over its ability to finance its debts.
Lim Oon Kuin, known to many in the industry as OK Lim, will be resigning from all executive roles in Hin Leong, the Xihe Group and related companies as of April 17, according to the people, citing the email. He will also step down as director and managing director of Ocean Tankers.
Hin Leong was established in 1963 and has grown into one of Asia’s largest suppliers of ship fuel, or bunkers. Ocean Tankers owns a fleet of more than 100 oil tankers of various sizes, makiing it one of the world’s largest.
Its sprawling empire also comprises Ocean Bunkering Services - one of Singapore’s’s top three marine fuel suppliers - and Universal Terminal, one of Asia’s biggest oil storage terminals, loacted on Jurong Island, which it co-owns with China’s oil giant PetroChina.
Both Hin Leong and Ocean Tankers have filed for protection from its creditors under Section 211B of Singapore’s Companies Act. The filing, under section 211(B) of the Singapore Companies Act, automatically provides companies with a 30-day moratorium protection and allows them to apply for further extension which is subjected to the court’s approval.
Hin Leong could apply for an extension of six months to a year, one of the sources familiar with the matter said.
“(Moratorium) means protection against liquidation against the company and it’s usually done to cover the guarantor of the company against bankruptcy,” the second source said.
“It means creditors must have been very close to starting enforcement.”
