The atmosphere was good at the meeting yesterday morning. Following extensive negotiations with the group of banks behind the major oil trading company, OW Bunker had finally landed a deal to secure the future. Two somewhat embarrassing guidance adjustments during the fall this year could be put behind them. A new risk management program had been agreed upon, which should rule out the risk of having to once again announce to the market that the financial guidance had been too optimistic.
A few days earlier, the management team had even succeeded in convincing former risk management chief Kenneth Rosenmeyer to rejoin OW Bunker to head the new program. So the relief was great when the banks finally gave the plans the thumbs up. Until there was a knock at the door.
Outside was an employee who had come all the way from Singapore, a manager from the Asian subsidiary Dynamic Trading Oil wanted a word with this boss.
A knock at the door
“He showed up just as we were in a positive dialogue to finalize a deal for the future with the banks. After that, they backed out of it,” a clearly affected Chairman of the board, Niels Henrik Jensen, reveals to ShippingWatch.
According to people who were present at the headquarters yesterday, it was a teary-eyed manager who came clean to his bosses and according to Niels Henrik Jensen told all about the systematic fraud that had been taking place at the Singapore unit for the past six months - a fraud scheme that has now brought OW Bunker to its knees, as the banks have backed out of any deal due to massive losses that could come to USD 125 million. Add to this, unrealized losses on existing contracts estimated at an additional USD 150 million and the total loss could amount to around USD 275 million.
“We don’t know why he came to us and told us about the matters, and we cannot go into details about the events because police investigations are ongoing,” Niels Henrik Jensen explains.
Had to accept it
“We had to accept the decision from the banks.”
At the moment, the management team, employees, suppliers, shareholders and customers are all left guessing about the future of the company. OW Bunker will attempt to regroup and safe the spoils, but the Chairman will not speculate about the chances for success.
Following an IPO in the spring, a total of 20,000 investors bought shares in OW Bunker and they should not count on seeing any return on their investment, says Niels Henrik Jensen, adding: “in the event that we manage to resurrect the company.”
The Chairman can but express his regret to all the stakeholders following the fatal downfall of the company, which was seen as the maritime player to finally break down the wall to the Danish stock exchange that has been home to no more than a handful, led by AP Møller-Maersk.
ShippingWatch has already spoken to a number of shareholders who all say they invested money based on a belief that CEO Jim Pedersen was a guarantee for a return on their investment, which makes the surprise over the sudden loss all the greater.
Several people involved
Allegedly, there were a number of people involved in the systematic fraud. At the moment, one person in Denmark and one or more people in Singapore have been included in the investigation.
People with knowledge of Dynamic Oil Trading’s manager tell the story of a life in the fast lane – quite literally, as it involved sports cars cutting through Singapore’s damp, tropic air – but also a life with a constant focus on revenue and volume growth.
OW, which employs more than 600 people, has on Thursday morning notified the bankruptcy court in Aalborg of its plans to reconstruct two subsidiaries that hold the group’s primary operating activities. The companies are believed to be insolvent and the management team now has its work cut out trying to save the pieces and avoid bankruptcy.
The equity capital of about USD 262 million is believed to be lost. Niels Henrik Jensen does not care to speculate on whether or not the company can avoid bankruptcy.