Xihe seeks to restructure business amid OCBC's judicial management application

Singapore

OIL tanker shipowner Xihe Group, which is linked to the Lim family of troubled oil trader Hin Leong, plans to embark on a "consensual restructuring" with its lenders and sell some of its vessels, the company said in a press statement on Thursday.

Xihe's statement comes ahead of a Singapore High Court hearing on Aug 13, where Hin Leong creditor OCBC Bank seeks to bring Xihe and four of its vessel-owning units under judicial management.

On Wednesday, Bloomberg reported that the Lim family is currently trying to block OCBC's request. The report cited an affidavit filed by Xihe's interim chief executive Kenny Lim saying that the bank's application will "disrupt the constructive discussions" that Xihe has had with lenders.

Kenny Lim is the brother of Hin Leong founder Lim Oon Kuin, also known as OK Lim.

In the Thursday press statement, Xihe said that it is working with the interim judicial managers of Hin Leong and Hin Leong's shipping unit Ocean Tankers Pte Ltd (OTPL), to seek redelivery of some vessels. A number of bareboat charter contracts that Xihe had entered with OTPL and Hin Leong have been terminated, and most of those vessels have not been redelivered.

"There is a market for chartering out these vessels and Xihe is actively pursuing opportunities to re-deploy them," Xihe said.

In addition, Xihe, which owns close to 140 vessels, is seeking to downsize its fleet. The company said that it has concluded the sale of several of its vessels and is in discussions with some potential buyers on a programme of sales.

This week, Xihe took redelivery of its 108,953 DWT oil tanker, called the "Ocean Queen", from Hin Leong, its bareboat charterer, and OTPL, which was the ship manager. The vessel is now under the technical management of a newly-appointed ship manager.

Xihe added that OK Lim and his children are no longer part of the management team. A new board of directors, consisting of a majority of independent directors, is also being finalised as part of the consensual restructuring with its lenders.

Besides Kenny Lim, its other key personnel at the moment are commercial Director Desmond Chong, sales and purchase director Michael Tan and vice-president of fleet management Captain Zhang Yujie.

"Xihe has been updating its lenders regularly on its strategic plans and the direction it has charted. It is confident of getting its business back on track and with full commitment to bring about the best outcome for all its stakeholders, partners and clients," the company said.