Reuters: Bankruptcy News: Bondholders fear worst at Petroplus

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Bondholders fear worst at Petroplus May 31st 2012, 14:38 By Christopher Spink Thu May 31, 2012 10:38am EDT LONDON, May 31 (IFR) - Investors holding notes with a nominal value of USD1.75bn against the UK subsidiary of Petroplus look increasingly unlikely to recover more than a small part of their principal after the administrator of the UK oil refinery business said it had not been able to sell the site after four months of trying. "We have worked tirelessly to explore all feasible options for the refinery. We have had contact with over 100 possible investors and purchasers. We have been unable to reach a deal to date," said Steven Pearson, joint administrator and partner at PwC. The firm was appointed in late January and soon after secured an undisclosed three-month facility from a consortium made up of Petroplus co-founder Marcel van Poecke's AtlasInvest vehicle, a fund managed by US private equity KKR, and Morgan Stanley's commodities arm. This allowed the Coryton refinery in Essex to keep being supplied with crude oil and functioning whilst a buyer was sought for the 560-acre site as a going concern. Pearson added that this task was complicated because of weak trading conditions. "We have been losing money. Refining margins are currently low and the operation is loss making. We had to make a decision. We could have decided to give the refinery away but we have a statutory duty to maximise recoveries for creditors," he said. In addition, PwC had to decide whether to press ahead with a USD150m capital expenditure programme or embark on winding down operations and making the site safe, which will also prove costly. Pearson said he would still entertain offers during the three months it would take to close down Coryton but he warned that prospects of a sale were "slim". PwC had tried to cut a deal with the AtlasInvest consortium as well as bondholder groups and other parties but financing proved hard. The firm estimated that USD1bn would have been needed to put the refinery back on a sustainable footing. Pearson suggested that the AtlasInvest group had been willing to enter an agreement but only by taking the refinery off the administrators for a nominal GBP1 sum. It is understood that the Government was also unwilling to provide any financial guarantees as it did not regard the plant's closure with the loss of 500 jobs as a significant threat to the country's fuel supplies. Pearson said he was also investigating alternative uses for the site, such as a place to store petrol and other refined products from overseas ahead of distribution in the UK, pointing to the jetty landing that Coryton boasts. The four bonds with guarantees against Petroplus Refining and Marketing Ltd, the UK subsidiary owning Coryton, were trading at 40 cents on the dollar when PwC was appointed in February but last week were changing hands at just 15 cents. One source close to the bondholders said: "It should never have gone into administration. We had wanted to do a deal but I don't think there's much chance. I understand only the group who came in post administration will come out whole as they claimed super senior status." AtlasInvest declined to comment. The investor has teamed up with oil trader Vitol to buy Petroplus' Swiss refinery Cressier. Russian oil trader Gunvor has bought the Belgian refinery at Antwerp and a German one at Ingoldstadt. A sales process for Petit Couronne in France continues. (Reporting By Christopher Spink, Editing by Julian Baker) Link this Share this Digg this Email Reprints

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