SINGAPORE (Reuters) - The family that owns beleaguered Singaporean oil trader Hin Leong Trading (HLT) is seeking to block a request from creditor OCBC that overseers be appointed for Xihe Holdings and four of the family’s other subsidiaries to recoup its debt.
Oversea Chinese Banking Corp (OCBC) OCBC.SI applied last week for the Singapore High Court to appoint judicial managers over Xihe, owned by the family of Hin Leong founder Lim Oon Kuin, known as O.K. Lim.
Kenny Lim Oon Cheng, Xihe Holdings interim chief executive, said in a July 28 affidavit reviewed by Reuters that granting OCBC’s request will “disrupt the constructive discussions that the Xihe Group has had with third parties including lenders”.
It could also result in a fire sale of its assets and “a destruction of value” for shareholders including lenders, he added.
OCBC’s application is an attempt to obtain a “backdoor” ruling to freeze the Lim family’s assets in Xihe Group “to protect their interests as lenders to HLT” and its other shipping company Ocean Tankers Pte Ltd, Kenny Lim also said.
HLT owes OCBC $250 million.
The case which was heard at the Singapore High Court on Wednesday has been adjourned up to Aug. 13 to allow the banks working on the restructuring process with Xihe group to continue, said a source with direct knowledge of the matter who declined to be identified.
Xihe “and its lenders have adjourned court proceedings to work together towards a consensual restructuring,” the group of companies said in a statement on Wednesday.
OCBC declined to comment when contacted by Reuters.
Kenny Lim is the brother of O.K. Lim, who with his son Evan Lim Chee Meng and daughter Lim Huey Ching own 77 companies under Xihe Group, which consists mainly of Xihe Holdings and Xihe Capital. Xihe Group owns 136 ships ranging from coastal barges to very large crude carriers (VLCCs).
HLT and Ocean Tankers were placed under court-appointed interim-judicial management to restructure billions of dollars of debt after a crash in oil prices revealed a massive, years-long fraud at the trading house.
OCBC’s ship mortgage claims against Xihe Holdings through four of its subsidiaries totalled about $130 million which is below the estimated $170 million in net asset values of those subsidiaries, Kenny Lim said.
As each subsidiary owns only one or two ships, it “makes no sense to say that the business has to be rehabilitated”, which is what a judicial manager is used for, he said.
The total valuation of the entire Xihe Group fleet is about twice the total amount of the $995 million in loans held against the company, Xihe’s financial advisor Nicky Tan Ng Kuang said in separate July 28 affidavit reviewed by Reuters.
Xihe Group has been in discussions with five different bridge financiers, including a leading Wall Street investment bank, Tan said, while it has also identified and is in discussions with at least six potential financiers, including a regional listed company.
Tan said that the Xihe Group is also in talks with at least 84 parties on the potential sale of its vessels, adding that the company has sold four vessels so far.
Xihe is also in negotiations with “a large multinational commodities and trading company” for the charter of two vessels which would generate about “$200,000 in charter income per month for each vessel,” he added.
Lim, Xihe Group, their lawyers and financial advisor did not immediately respond to requests for comment.
Reporting by Roslan Khasawneh, additional reporting by Anshuman Daga; Editing by Christian Schmollinger and Jason Neely
Our Standards: The Thomson Reuters Trust Principles.