Hin Leong Trading gets shot at rescue with successful JM bid

Singapore

DELUGED by fast-and-furious claims from lenders and clients, distressed Hin Leong Trading (HLT) pressed the case for - and was granted - an interim judicial management (IJM) order by Singapore's High Court in a virtual hearing that lasted over three hours on Monday.

"There is value in HLT and its related companies, as can be seen from the numerous indications of interest by potential investors," said HLT director Evan Lim Chee Meng in his affidavit to support the troubled company's application to be placed under judicial management (JM).

He said the company was still in talks with a potential strategic investor who is keen to invest in the "fully integrated business platform" of HLT, sister company Ocean Tankers Pte Ltd (OTPL) and the other businesses under the group.

"...there has been no indication that they (potential investor) are withdrawing their interest...," he added. It is widely understood that the potential investor is China's state-owned Sinopec - one of the world's largest refiners. Mr Evan Lim and his sister Lim Huey Ching are the children of Hin Leong's founder Lim Oon Kuin. Mr OK Lim, as he is widely known, built the Hin Leong empire from a one-man-one-truck oil dealer in the 1960s into the city state's largest oil trader and one of the region's largest tanker owners and bunkering firms.

Goh Thien Phong and Chan Kheng Tek of PricewaterhouseCoopers Advisory Services (PWC) were appointed as interim judicial managers for HLT. They have eight weeks (by June 22) to file a preliminary report, which will include an assessment on whether the commodity trader can be restructured or rehabilitated.

HLT's application was heard before High Court Judge Kannan Ramesh.

Meanwhile, The Business Times understands that Ocean Tankers has a week to decide if it wants to continue to pursue a debt moratorium from the court or - like its sister company - ditch that for JM.

With over 55 parties attending the hearing, from court officers, lawyers to self-representing creditors, Monday's hearing held over the Zoom app was easily one of the largest sessions, according to lawyers.

Even so, one person remarked: "It was a fairly docile session. No big objections."

The session was earlier scheduled for April 30 but was brought forward to Monday following requests from some lenders, BT understands.

An oil rout triggered by the Covid-19 pandemic has strained HLT's financials, while a probe by Singapore's authorities after it came to light that the company hid US$800 million losses from futures trading in financial statements has now led to a reputational fallout for one of Singapore's giants in the oil space.

"It's shock and horror really. Everything has happened so fast and nobody has had much time to process it," said a representative of one of over 23 creditors exposed to the group, which has a hefty debt pile of some US$4 billion.

HLT had earlier sought a debt moratorium from the court but lenders had opposed the move, preferring instead for any potential restructuring to be led by court-appointed judicial managers rather than the HLT management, more so given the ongoing probe into the firm by Singapore's Commercial Affairs Department. As a result, HLT had withdrawn its debt moratorium application.

Sources close to the case say there was some mild unease among some lenders over the choice of PwC as interim judicial manager, as the firm was earlier hired by HLT's management as a financial adviser to help restructure its staggering debts. Typically, interim judicial managers are eventually hired as judicial managers in the same case.

"There may be some discomfort there as PwC was earlier hired to act for the company and protect its interest. Can the judicial manager switch hats and look critically at the situation and take necessary action against the parties involved in HLT if need be?" asked one observer.

Even so, it is believed that there were no objections to the appointment of PwC as interim judicial manager at the hearing. One reason for that could be that PwC was HLT's adviser for barely a couple of weeks before the JM application.

The troubles at HLT continue to roil Singapore's oil and gas realm, a key market in the world.

A market watcher said: "These guys are the biggest players around here. If this was a financial crunch caused by the oil crisis, we can understand but it goes beyond that. There is some suggestion of fraud but no visibility to what extent and how big the hole really is. That is making the sector somewhat insecure."

READ MORE: Sembcorp Industries unit obtains court order to secure gasoil stored at Hin Leong's terminal