Brightoil’s financial troubles continue

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Oil giant Brightoil has recently published a profit warning, where it states that the group’s losses for the 6-month period which ended on the 31st December 2018 are provisionally estimated at USD 57.61 million. Not only that, but despite the ongoing efforts and some favorable developments, the Group has not yet overcome its overall financial difficulties.

Despite the profitability on its upstream segment, the group’s results have been hit by a drastic reduction of its trading activities and bunker sales after a considerable cut of the available financial credit lines. According to the Maritime and Port Authority of Singapore, Brightoil’s local subsidiary has shrunk in the list of Singapore bunker suppliers in terms of volume delivered; from the 17th position down to the 28th position. According to Brightoil, the lower margins involved in bunker trading, due to the increased competition of the recent years, is a major reason which have negatively affected the group’s operating results. The depressed shipping markets is another reason, since Brightoil is active also in this industry.

Furthermore, the company has also announced that the group’s total debts are estimated at approximately $1.90 billion and this amount includes creditors’ claims of around $250 million. Five VLCC oil tankers and six bunkering barges remain arrested from company’s creditors, as a result. In the meantime, the trading of its shares in the Hong Kong stock exchange remains suspended since October 2017 and will remain suspended until further notice.

On the other hand, there are some positive news as well. Brightoil has announced that some of its major creditors and financial counterparties have reacted positively on a plan for the potential restructuring of its current obligations. Furthermore, a recent wind-up petition against its Hong-Kong subsidiary was withdrawn after a mediation between the group and the creditor. Such a successful restructuring might help the group align the legal actions already commenced against some of its wholly-owned subsidiaries and improve its overall liquidity, which can subsequently give the company access to new sources of credit finance in the future, so as to support its ongoing operations and satisfy its outstanding claims.

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