Coastal Oil troubles hit Singapore banks, others with US$350m exposure

Singapore

TROUBLE at Coastal Oil Singapore, a crude oil products supplier which has filed for liquidation, has hit at least 10 banks, including all three Singapore banks which are owed about half of the total debt of US$354 million, as well as Cosco Shipping International (Hong Kong).

Coastal Oil Singapore had filed for liquidation as part of a creditors' voluntary winding up scheme on Dec 13, 2018. The company's website, which is "currently not available", said previously that it was the first-tier subsidiary of Coastal Holdings, a maker of refined petroleum products incorporated in Hong Kong in 1990.

The Business Times understands that Coastal Oil Singapore is scheduled to hold a creditors' meeting on Jan 10 in the city-state to determine a change of liquidators, among other business. AAG Corporate Advisory was the provisional liquidator. A check on Accounting and Corporate Regulatory Authority (ACRA) website revealed that Coastal Oil Singapore is involved in wholesale of solid, liquid and gaseous fuels and related products like bitumen. It is not licensed by Maritime and Port Authority of Singapore (MPA) for bunkering activities.

According to documents obtained by specialist bunker media, Manifold Times, Coastal Oil Singapore owes US$357 million to 79 companies. Of the total, about US$354 million are owed to major banks.

OCBC Hong Kong is reportedly owed US$122.7 million; Rabobank HK US$67.6 million; HSBC HK US$40.1 million; DBS HK US$29.9 million; BNP HK US$25.2 million; BOC Bank HK US$19.9 million; UOB HK US$19.5 million; Standard Chartered HK US$15.6 million; CMB HK about US$10 million and BNP Futures US$3.2 million.

When contacted, DBS and OCBC declined to comment on the exposure they have. UOB's spokesman said: "We regret that as part of the Banking Act, we cannot confirm or disclose any information on customer relationships we may or may not have."

Early January, DBS Singapore seized two vessels belonging to Coastal. One is a 24,200 deadweight tonne (dwt) products tanker, Atalanta, and the other a 5,500 dwt products tanker Coastal Neptune. It has a mortgage claim of US$5.36 million filed against the Atalanta and a claim of US$3.59 million against the Coastal Neptune.

VesselValues.com estimated the 2015-built Atalanta to be worth US$15.58 million.

Separately, in a filing to the Hong Kong stock exchange, Cosco Shipping International, the ship services arm of China's Cosco Shipping Corporation, said a number of banks have demanded repayment of alleged debts owed by its indirect wholly-owned subsidiary, Sinfeng Marine Services, to Coastal Oil Singapore.

Coastal Oil Singapore is a key crude oil product supplier to Sinfeng, which supplies and trades marine fuel and related products, covering major oil ports such as Singapore and Malaysia.

"Based on a preliminary assessment, the management of Sinfeng is of the view that the documents in relation to almost all of the alleged debts are not genuine," Zhu Jianhui, vice-chairman and managing director of Cosco Shipping International, said.

Mr Zhu added that Sinfeng was in the process of conducting an investigation and seeking professional advice on the matter.

"As the investigation relates to events which involve a voluminous amount of information and documents, additional time is required for completing the investigation," he warned.

Revenue from Sinfeng accounted for about 66 per cent of Cosco Shipping International's revenue for the financial year ended Dec 31, 2017, and 69 per cent for the six months ended June 30, 2018. In terms of pre-tax profit, Sinfeng accounted for 1.3 per cent of Cosco Shipping International's FY2017 pre-tax profit and 1.2 per cent of H12018 earnings.

For the year ended Dec 31, 2017, and the six months ended June 30, 2018, purchases from Coastal Oil Singapore represented about 94 per cent and 93 per cent of Sinfeng's total purchase costs, respectively.

"The board expects that the revenue of the group will decrease significantly unless and until alternative suppliers to Coastal Oil Singapore are identified," Mr Zhu said. However, as Sinfeng's profit contribution is "insignificant", the board "currently does not foresee any material adverse impact on the group as a result of the liquidation of Coastal Oil Singapore".