Singapore: CAO’s flame is rekindled
China Aviation Oil (Singapore) Corporation (CAO) the Singapore-listed subsidiary of mainland Chinese aviation fuel importer China Aviation Oil Holding Company (CAOH) announced in December a successful debt restructuring including significant investments from BP Investments Asia and Temasek Holdings.
CAO collapsed under losses of more than $500 million in November 2004 after a disastrous trading strategy in derivatives and an attempt to cover up losses by previous management. The collapse caused outrage since it occurred weeks after a share placement by CAOH before which CAO management had informed CAOH of the losses.
The debt restructuring deal entails the injection of $130 million of new capital by CAOH ($75.77 million), BP Investments Asia ($44 million) and Temasek ($10.23 million) as well as an additional $30 million of cash raised from the sale of existing assets. Creditors other than CAOH will receive cash repayments totalling $130 million, with the balance being termed out over five years.
The Singapore authorities have ensured that CAOH atones for the sins of its errant Singapore subsidiary.