Altor's OW Bunker insolvent

In a message to the Copenhagen stock market this morning, OW Bunker said two subsidiaries in which, "the main operational activities of the group are located" are expected to be insolvent, and are undergoing in-court restructuring procedures.

"The purpose of the in-court restructuring procedure is to establish an overview of whether a basis for continued operations of the companies can be established, including a basis for injecting further capital or other similar solution. For the time being, the financial impact cannot be assessed; however, it must be assumed that the group's equity is lost," the company wrote in its message to the stock market.

The extent of the fraud in Singapore-based subsidiary Dynamic Oil Trading is not yet clear, but findings so far suggest a potential loss of around $125m, the company said in an announcement late on 5 November.

In the same message, but unrelated to the fraud, OW Bunker also said it expected losses to total $150m after a review of its risk management contracts, including a $24.5m loss announced on 23 October.

The company's head of risk management and executive vice president, Jane Dahl Christensen has been dismissed with immediate effect as a result of the failure, which was related to Ow Bunker's oil hedging strategy.

"We are deeply disturbed by how this situation has snowballed over an extremely short period of time," Søren Johansen, partner at Altor Equity Partners and board member of OW Bunker, said in a statement.

"We have to get to the bottom of this as soon as possible. The impact to employees, shareholders and customers is terrible. Since being informed of the situation, the board has done all it can to try to protect what was, before the breaches mentioned in the company's release, a very sound business."

This morning it was announced the company was unable to find a solution with lenders, which OW Bunker had been in discussion with regarding its credit facilities, after the losses were discovered.

The company was floated by Altor at the end of March this year, listing at DKK 175 per share, and became the second-largest listed company in Denmark, measured by revenue.

Trading of the company's shares was suspended yesterday, and will remain suspended until further notice.

Carnegie, which was a main bank in the IPO alongside Morgan Stanley, said it had written off its DKK 3.6m holding in OW Bunker, by revaluing the shares from its last trading price of DKK 83.5 per share to DKK 1 per share. The write-off represents 0.5% of Carnegie WorldWide/Danske Aktier's portfolio.

OW Bunker's stock price had already fallen substantially in October as the company faced criticism for its risk management strategy, and saw two substantial shareholders sell down their holdings.

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