Oil rig giant is key to Titan's restructuring

Titan Petrochemicals, which is restructuring more than US$400 million of debt and has just signed a conditional co-operation deal with the world’s largest oil rig maker Keppel Corp, needs up to 400 million yuan (HK$502 million) to transform its mothballed shipyard in Fujian province into a rig-making base, according to Titan’s chief.

The shipyard is Titan’s only asset as a base for a viable debt restructuring and for it to keep its listing status, said chairman Zhao Xuguang, in an apparent message to Titan’s creditors.

Titan’s white knight and largest shareholder, Guangdong Zhenrong Energy – a unit of state-owned commodities trader Zhuhai Zhenrong – will co-operate with Singapore-based Keppel, whether or not Titan’s restructuring is successful, he said.

“If it is not successful, Guangdong Zhenrong, as Titan’s and the shipyard’s largest creditor, will need to exercise its right to take back the shipyard,” he said.

Hong Kong-listed Titan, a fuel-trading and logistics firm, was founded in 2002 by Fujian businessman Tsoi Tin-chun. It expanded aggressively by buying tankers, building fuel storage tank farms and a shipyard, after selling US$400 million of high-yield bonds in 2005.

The global financial crisis and the oil trading and shipping downturn forced Titan to restructure its debt in 2010 and sell the shipyard for HK$1.8 billion. But the buyer failed to pay half the amount citing problems with the shipyard, causing Titan to default on its debt again.