Hin Leong Trading, one of Singapore’s largest independent oil traders, said that it failed to declare “about $800 million in futures losses over the years,” Reuters reported, citing a court filing dated April 17. The company is seeking a six-month moratorium on its roughly $3.85 billion debt load owed to 23 banks.
The company’s founder and director, Lim Oon Kuim, 77, was cited in the filing as taking responsibility for directing the finance department to conceal hundreds of millions of dollars in losses from appearing on the company’s financial statements.
Lim’s only son, Evan Lim Chee Meng, said in a separate filing that his father sold a chunk of the company’s oil inventories and used the proceeds as general funds, even though the barrels were pledged as collateral to secure loans from banks.“As a result there is a large shortfall of inventory as compared to the quantum of inventory which has been secured in favor of the bank lenders who had provided inventory financing,” Evan wrote.
Evan is also a director of Hin Leong and its subsidiary Ocean Tankers, the group’s shipping arm which claims to own a fleet of more than a hundred oil tankers, but also filed for bankruptcy protection from creditors under Section 211B of Singapore’s Companies Act. Both companies are solely owned by the Lim family, according to company filings.
Hin Leong’s move to seek court protection from creditors comes as oil prices hit a two-decade low from the Saudi-Russia price war combined with weak global demand from the coronavirus pandemic. The company’s court filings indicate that its problems had started much earlier because it had been losing money for the last few years.
In a presentation to its creditors earlier this month, Hin Leong revealed it had total liabilities of $4.05 billion against assets valued at just $714 million, according to Reuters. The company did not respond to emailed requests for comment.
Founded in 1963 by Chinese immigrant Lim at age 20 with a single truck delivering diesel to fishermen and small rural power producers, the storied Singapore oil trader has grown to become one of Asia’s largest suppliers of ship fuel. He also co-owns oil storage unit Universal Terminal with PetroChina and Macquarie Asia Infrastructure Fund.
Lim was ranked No. 18 on last year’s list of Singapore’s richest people with a net worth estimated at $1.65 billion. Forbes no longer considers him a billionaire following the disclosure of Hin Leong’s bankruptcy filing and admission of sustained losses.