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. In addition to guaranteeing CAO’s new termed-out indebtedness, CAOH will waive almost all of its outstanding shareholder loans and all dividends due from CAO in return for an allotment of just 29.881