Repayment hopes dim with Hin Leong windup

Singapore

HSBC and other global banks owed US$3.5 billion by Hin Leong Trading (Pte) Ltd may recoup less than expected from the collapsed Singapore oil trader after a sale process failed to attract bids for the company.

Hin Leong's court-appointed managers plan to file an application soon to wind up the company after three potential bidders walked away from the process to buy Hin Leong and two related companies as a combined entity, according to a letter PricewaterhouseCoopers (PwC) sent to creditors that was seen by Bloomberg.

Assets of Hin Leong's sister companies Ocean Tankers Ltd and Xihe Holdings may still draw interest from potential bidders, according to the letter.

Banks including HSBC and DBS were already facing recoveries of pennies on the dollar following one of the largest corporate collapses ever in Singapore. An acquisition of Hin Leong and Ocean Tankers and Xihe Holdings as a combined entity would have eased the pain for lenders and helped them recover more than the firm's US$257 million in estimated assets. The liquidation of a company usually results in a fire sale of its assets, which raises less than a formal bidding process.

Representatives for PwC and HSBC declined to comment. The Lim family did not immediately respond to a request for comment that was sent to a representative.

Hin Leong, once one of the largest fuel traders in the Asian finance hub, collapsed last year after the oil price plunge triggered a default that unveiled years of hidden losses and alleged fraud by founder Lim Oon Kuin. Many lawsuits ensued from the lenders and various trading counterparts of the company, which had sold oil pledged as collateral to other firms.

London-based HSBC has the most exposure at US$600 million, based on estimates in court filings last year. DBS, ABN Amro and OCBC are next at about US$200 million to US$300 million each. BLOOMBERG