SINGAPORE - Ocean Tankers, the shipping arm of troubled oil trader Hin Leong Trading, has withdrawn its application for a debt moratorium and asked for Ernst & Young to be appointed its interim judicial manager, in a bid to "urgently stabilise its business" and to give "greater confidence" to its business partners, The Straits Times has learnt.
High Court Justice Kannan Ramesh on Tuesday (May 12) approved the appointment of Ernst & Young's Ms Angela Ee Meng Yen and Mr Purandar Janampalli Rao as interim judicial managers, and also directed the applications for judicial management of Hin Leong and Ocean Tankers to be heard together. No date has been set yet for a court hearing.
The applications are to be heard together because there are potential cross claims as well as common shareholders and directors, sources close to the matter said.
Ocean Tankers director Evan Lim Chee Meng, in court documents cited by sources, said its financial troubles stem from its dealings with Hin Leong, and that its exposure to some claims could amount to US$2.07 billion (S$2.93 billion).
"The proposed debt restructuring of Ocean Tankers will inevitably be linked to or intertwined with Hin Leong's debt restructuring as Ocean Tankers' potential contingent liabilities are related to the debts owing by Hin Leong to its bank lenders," he said.
"However, this does not mean the business and operations of Ocean Tankers are dependent on Hin Leong... Historically about 85-90 per cent of all cargoes carried by Ocean Tankers-operated vessels are for third-party charterers, and not Hin Leong," said Mr Evan Lim, son of Hin Leong founder Lim Oon Kuin.
"Due to the present buoyant market for oil tankers, Ocean Tankers believes it will be able to generate a healthy profit on charters to third parties that are independent of Hin Leong," he said.
Hin Leong and Ocean Tankers initially sought a six-month moratorium on debts of more than US$3.6 billion to 23 banks. The filing cited the collapse in oil prices and the coronavirus pandemic, which battered global oil demand and pushed up costs for Hin Leong.
The oil trader last month handed over management of the company to PricewaterhouseCoopers Advisory Services. The about-turn came after several bank lenders with large exposure objected to its application for a moratorium.
The interim judicial management application by Ocean Tankers did not face any objection from nearly 40 creditors at Tuesday's hearing, said Mr Moses Lin, partner of Shook Lin & Bok, which represents major creditor HSBC Holdings.
Sources said the interim judicial managers are to provide an outline of issues to be addressed four weeks from Tuesday. These include whether any irregularities in the conduct of its affairs are uncovered. The full report is to be filed eight weeks from Tuesday.
Ocean Tankers also failed in its bid on Tuesday to get a court declaration that its overseas property be protected during restructuring. This could include more than 100 vessels outside Singapore it claims to have an interest in.
Hin Leong's troubles escalated following news of a probe by police and increased scrutiny by regulators. This after Mr Lim Oon Kuin said the firm hid about US$800 million in losses incurred from futures trading over the years on his orders.
