ICICI seeks impounding of two Hin Leong vessels

India-based ICICI Bank was reported yesterday to be seeking to impound two vessels operated by Ocean Tankers (Pte) Ltd, a unit of Singapore oil-trading company Hin Leong Trading Pte Ltd (HLT).

An unidentified ICICI source told Reuters on Monday that crude oil tankers, Wu Yi San (IMO 9629366)and Chang Bai San (IMO 9534042), were carrying cargoes financed by ICICI. The source said that the bank had about $100m exposure to HLT.

A court filing has claimed that, HLT’s founder and director had directed his firm not to disclose hundreds of millions of dollars in losses over several years. Shares of ICICI Bank fell about 4% after Reuters reported ICICI’s exposure to HLT.

Earlier this month some lenders pulled credit lines from Hin Leong amid concerns over its ability to finance its debts. It was reported to owe almost $4bn to more than 20 banks, including HSBC Holdings Plc.

ABN Amro Bank NV and Société Générale SA have filed separate applications for charges with the Accounting and Corporate Regulatory Authority related to Hin Leong cargoes and receivables.

Bloomberg reported that Hin Leong Ltd hid about $800m in losses racked up in futures trading, on the orders of its founder Lim Oon Kuin, suggesting a much bigger hole in the company’s finances than thought.

Lim Oon Kuin, known to many as OK Lim, has resigned from all executive roles in Hin Leong, the Xihe Group and related companies as of April 17th, according to affidavits. He will also step down as director and managing director of Ocean Tankers.

Hin Leong Trading (Pte) Ltd is/was one of the biggest players in the world of physical fuel-oil trading, but would appear to have been badly hit by the dramatic decline in oil prices so far this year.

The company also sold some of the millions of barrels of refined products it had used as collateral to secure loans from its banks, according to an affidavit by the founder’s son, Lim Chee Meng, attached to an email from the company’s shipping affiliate, Ocean Tankers (Pte) Ltd., notifying recipient parties of proposed moratorium proceedings.

Hin Leong looks to be facing a significant shortfall between the oil stocks it held and the inventories it has pledged to its banks as collateral.

Mr Lim, also known as Evan Lim, said in the affidavit that he was unaware of the reason for losses suffered, which had accumulated over several years, asserting that his father had instructed Hin Leong’s finance department to omit the losses from its financial statements.

The father apparently admitted that he ordered the omission of the losses and said that the company had not been profitable for a few years, which was not the position put out in the company’s  financial statements.

“I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong,” he said in the document.

On Friday April 17th Hin Leong and Ocean Tankers filed for court protection from creditors. Both companies are solely owned by the Lim family.

Although Hin Leong posted total liabilities and equity of $4.56bn and a net profit of $78 million in the period ended October 31st 2019, earlier this month it revealed that total liabilities in early April 2020 were $4.05bn, while assets were just $714m.

The balance sheet of the company showed no equity at all as of April 9th and warned that “figures obtained from the company are subject to verification”.

Hin Leong’s latest accounts for the financial year ending October 31st 2019 were audited by Deloitte & Touche LLP.

Hin Leong told its creditors that it only had $141m worth of oil products inventory, compared with the $1.28bn it declared in its audited statement on October 31st 2019. Hin Leong had only $50m in cash early this month, compared with $461m in October 2019.

Hin Leong was established in 1963 and over the decades became one of Asia’s largest suppliers of bunkers. Ocean Tankers owns a fleet of more than 100 oil tankers.

2012-built, Singapore-flagged, 164,169 gt Wu Yi San is owned by Nasn Zhou Maritime Pte care of manager Ocean Tankers Pte of Singapore. It is entered with Gard P&I Club on behalf of Ocean Tankers Pte.

2012-built, Singapore-flagged, 164,169 gt Chang Bai San is owned by Nan Chiau Maritime Pte care of manager Ocean Tankers Pte Ltd of Singapore. It is entered with Gard P&I Club on behalf of Ocean Tankers Pte Ltd.