Malaysia’s CIMB alleges ‘suspicious’ Hontop Energy oil deals with BP

A woman wearing a facemask as preventive measure against the spread of the coronavirus (COVID-19) walks at the business district in Singapore. (AFP)
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Updated 06 July 2020

Malaysia’s CIMB alleges ‘suspicious’ Hontop Energy oil deals with BP

  • Hontop is one of four commodity trading firms in Singapore which ran into financial trouble as the oil price crashed

SINGAPORE: Singapore’s High Court has appointed an independent supervisor to oversee the restructuring of trader Hontop Energy.

The move came after Malaysian lender CIMB, its biggest creditor, raised concerns about what it described as “suspicious” deals involving oil major BP, according to an affidavit filed with the court this week.

Hontop, the trading arm of Chinese independent refiner China Wanda Holding Group Co. Ltd., is one of four commodity trading firms in Singapore which ran into financial trouble as the oil price crashed. CIMB is seeking repayment of $105 million it lent the company.

In the affidavit requesting the appointment of an independent supervisor to run Hontop’s affairs, CIMB Bank Berhad detailed how it lent Hontop the money to finance two crude oil deals late last year in a section titled “Suspicious transactions.” In total, Hintop owes nearly $470 million to seven banks, according to a list of creditors included in the affidavit.

Accounting firm RSM Corporate Advisory Pte Ltd. has been named interim judicial managers following the bank’s application, according to CIMB’s law firm Rajah & Tann and the affidavit. CIMB said it does not disclose or comment on specific names or clients. 

The deals cited by CIMB in its affidavit involved Hontop buying cargoes from Sugih Energy International Pte Ltd., now known as Aeturnum Energy International Pte Ltd, and telling CIMB it was reselling them to BP Singapore Pte Ltd. (BPS), a unit of BP.

Focus Law Asia LLC, representing Aeternum Energy, confirmed the transactions with Hontop.

In the first deal, CIMB agreed to finance Hontop’s sale of Russian ESPO crude onboard vessel Green Attitude to BP on an “open account” basis, where goods are shipped and delivered before payment is due, according to the affidavit.

When CIMB reached out to BP for payment in February, the oil major told the bank that the contract and payment for the cargo had been subject to a separate agreement between BP and Hontop and because it had not received payment from Hontop it was not obliged to pay Hontop or CIMB for the cargo, according to the affidavit.

BP did not specify what the agreement was about or say why it was meant to receive a payment from Hontop.

“It appears to be the case that, when applying for financing, Hontop neglected to disclose to CIMB material details about the nature of its agreement with BP,” BP said in a Feb. 20 letter to CIMB, a copy of which was appended to the affidavit.

In the second deal, for 1 million barrels of Russian Export Blend crude onboard vessel Gem No. 5, BP told CIMB in January that it did not enter into any contracts relating to this cargo.


Bailout will keep Air France-KLM afloat for less than year: CEO

Updated 50 min 6 sec ago

Bailout will keep Air France-KLM afloat for less than year: CEO

  • ‘If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected’
  • Governments are coming under pressure to tie airline bailouts to environmental commitments

PARIS: Bailouts provided to Air France-KLM by the French and Dutch governments will keep the airline flying less than a year, its CEO Benjamin Smith said Monday and evoked the possibility of injecting new capital.
In an interview with the French daily l’Opinion, Smith also warned that calls for airlines to contribute more to fight climate change could be catastrophic for their survival which is already under threat due to the coronavirus pandemic.
When countries imposed lockdowns earlier this year to stem the spread of the coronavirus airlines faced steep drops in revenue that have claimed several carriers.
A number of countries stepped in with support, including France which provided $8.2 billion to Air France and the Netherlands which received a $2.9 billion package.
“This support will permit us to hold on less than 12 months,” said Smith.
The reason is that air traffic is picking up very slowly as many northern hemisphere countries are now fearing a second wave of infections.
“If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected,” according to Smith, who said when the bailout was put together the airline was expecting a return to 2019 levels only in 2024.
Smith said discussions were already underway with shareholders on shoring up the airline group, and steps would be taken before the next regular annual meeting in the second quarter of next year.
“One, three or five billion euros? It is too early to put a figure on a possible recapitalization,” he said.
The airline group had $12.12 billion in cash or available under credit lines.
Major shareholders include the French government with a 14.3 percent stake, the Dutch government at 14 percent, as well as Delta and China Eastern airlines which each hold an 8 percent stake.
Governments are coming under pressure to tie airline bailouts to environmental commitments.
One proposal that has come from a citizen’s convention convoked by President Emmanuel Macron would cost airlines an estimated $3.6 billion.
Smith said the imposition of environmental charges on the industry would be “irresponsible and catastrophic” for Air France-KLM.