The European Commission has given its green light to a plan by the Swiss International commodity trading company Mercuria Energy Group to acquire the Greek bunker company Aegean Marine Petroleum.
The Commission considered that the competition rules are not violated in this case, since the two companies have a limited position in the markets where their activities overlap, EU Commission writes in its press release. This is the reason that the Commission examined the transaction in accordance with the simplified merger rules only.
This development comes just a few days after the New York bankruptcy court with a judge approved Aegean’s reorganisation plan, under Mercuria’s ownership. This means that Aegean can soon exit Chapter 11 bankruptcy protection and grow as a wholly-owned subsidiary of Mercuria Energy Group, one of the largest independent energy traders worldwide.
“With the support of Mercuria and our creditors, Aegean will emerge from the Chapter 11 restructuring significantly deleveraged, having reduced its funded debt by approximately 80%. Under Mercuria’s ownership, we will also have greater liquidity and supply capabilities than ever before and can serve our customers with a much broader suite of services”, Tyler Baron, Aegean Board Director, commented.
Aegean Marine Petroleum filed for Chapter 11 on the 6th November 2018. The bankruptcy petition came a few days after the company had gone through an internal audit investigation, appointed by the new Board of Directors, which, according to Aegean, has revealed that in the fiscal years 2015, 2016 and 2017, there was “embezzlement through illegal activities” for approximately $300 million. Those illegal activities, which are detailed in the report, include over-pricing and the issuance of bogus invoices. At the same time, the further investigation showed that there were attempts of fraud for several years, going back to 2010.
After the $300 million hole was found in its books and while the company was standing in the middle of a severe financial and liquidity crisis, Mercuria Energy Group agreed to help Aegean by offering USD 1 billion in revolving credit and an additional of USD 30 million in working capital/liquidity, against a 30% of company’s common shares and a seat on its board.
Thereafter, and following the company’s bankruptcy petition, Mercuria offered a proposal to take over 100% of Aegean’s shares for more than USD 532 million and make a credit facility available for the company to continue its bunkering operations. Finally, this acquisition proposal was approved by the US courts on the 20th November 2018.
According to people involved in the restructuring transaction, Mercuria made the proposal to acquire Aegean due to its belief that the IMO 2020 fuel emission rules will lead to higher financial returns needed to turn around the distressed business and raise more opportunities in the bunkering industry.