May 6, 2020 / 7:21 AM / 19 days ago

HSBC seeks judicial management for Singapore's Zenrock Commodities - sources

SINGAPORE (Reuters) - HSBC Holdings PLC (HSBA.L) has filed a court application to place oil trader Zenrock Commodities Trading Pte Ltd under judicial management over non-payment of dues and other issues, four people familiar with the matter said on Wednesday.

FILE PHOTO: HSBC headquarters building is seen in Pudong financial district in Shanghai December 8, 2010. REUTERS/Carlos Barria

Zenrock is the latest Singapore-based commodities trading firm whose finances have come under scrutiny as the collapse in global oil prices amid a slump in consumption due to the coronavirus pandemic ripples through the sector.

One of Asia’s top oil traders, Singapore’s Hin Leong Trading Pte Ltd, was placed under the management of a court-appointed supervisor late last month as it seeks to restructure billions of dollars of debt.

HSBC applied to the Singapore High Court for Zenrock to be placed under so-called judicial management, where a court appoints an independent manager to run the affairs of a financially distressed company in the place of existing management. Such moves are often seen favourably by creditors.

The bank nominated accounting firm KPMG as the interim judicial manager, pending a hearing of the judicial management application, one of the sources said.

Besides HSBC, Zenrock has at least 10 other creditors including Natixis SA (CNAT.PA), ING Groep ING.AS, Credit Agricole (CAGR.PA) and Bank of China (601988.SS), three of the sources said.

HSBC and KPMG declined to comment. Zenrock did not respond to requests for comment. Natixis declined comment, while there was no immediate response from the other banks.

Singapore-based Zenrock trades crude, oil products and petrochemicals and has offices in Singapore, Shanghai and Geneva.

Just late last month, the company issued a statement to reassure clients that it was not under financial duress after global oil and fuel prices slumped.

Zenrock was founded in Singapore in 2014 by a group of traders including Xie Chun, Zenrock Commodities’ president, formerly from Unipec. Tony Lin, formerly Vitol’s China head, is a director at the company.

The company’s revenues more than doubled to $6.15 billion in 2018, from $2.88 billion in the previous year, according to its latest annual financial statement on Singapore’s Accounting and Corporate Regulatory Authority website.

Its earnings before interest and tax (EBIT) also more than doubled to $11.17 million in 2018, from $4.62 million in 2017.

In September 2018, Xie told Reuters in an interview that the company expected trading volumes that year to rise to 9 million tonnes of crude and oil products, up from 5.7 million tonnes in 2017.

(Corrects Tony Lin is a director, not a founder of Zenrock in paragraph 10)

Reporting by Roslan Khasawneh, Jessica Jaganathan, Anshuman Daga and Florence Tan; Editing by Neil Fullick and Richard Pullin

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