Asset sales best for oil trader GP Global
GP Global’s creditors should allow it to sell assets such as a refinery and storage terminals to repay debt, FTI Consulting, brought in to restructure the UAE-based oil trader, has advised in a report.
The firm, which operates in almost 20 countries supplying oil products and lubricants ran into financial trouble earlier this year.
It appointed FTI Consulting’s Rod Sutton as chief restructuring officer in August.
The company has put three oil storage terminals and a 380,000-ton per year refinery in the UAE up for sale, according to the report.
The Hamriyah terminal in Sharjah can store 204,000 cubic meters (cbm) of oil products and the Fujairah terminal has a capacity of 412,000 cbm. The third one for sale is the Inner Harbor terminal.
Sutton said in the report that he is evaluating and negotiating some of the initial offers received for these assets.
The asset sales are expected to be completed within the next four weeks while other assets may be sold at over the next six months, he said.
GP Global confirmed that the report has been given to key stakeholders, adding that the initial feedback “seems positive”.
“It is in the creditors’ best interest to allow GP Global to undertake a complete business restructuring exercise and not opt to liquidate,” the company said in an email, citing the report.
FTI Consulting did not immediately respond to a request for comment.
“GP’s affairs should be restructured on terms which are satisfactory to creditors as soon as possible,” Sutton said in the report.
“This is to ensure that the residual value in the businesses and assets are preserved as much as possible.”
The report ruled out options such as refinancing, debt-to-equity swaps or a buyout “due to banks’ concerns regarding the Group’s trading practices and accounting irregularities” and volatile commodities prices, Sutton said.
Also, stakeholders are unable to apply for a court-appointed restructuring in the UAE as “Gulf Petrochem (the holding company) has ceased payments for a period exceeding 30 consecutive working days”, he said.
To incentivise the restructuring proposal, the Goel family, owners of GP, pledged to pay creditors $65 million over the next three years from the sale of assets held by its Indian entities and transfer personal real estate properties to GP with an estimated value of between $1.7 million and $8.8 million, the report said.
It did not identify GP Global’s creditors or the outstanding debts that the company has.
Reporting by Roslan Khasawneh; editing by Florence Tan and Jason Neely
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