Shares of restructured Titan Petrochemicals dive as trading resumes after a 4-year halt

PUBLISHED : Friday, 15 July, 2016, 11:37am
UPDATED : Friday, 15 July, 2016, 11:37am

Shares of debt-troubled petroleum fuel storage and logistics firm Titan Petrochemicals dived as trading resumed following four years of suspension, after it escaped liquidation upon restructuring over US$400 million of debt and clinching Singaporean oil rig giant Keppel as its business partner.

The Fujian-based firm, controlled by fuel and metals trader Guangdong Zhenrong Energy (GZE) – a unit of state-owned commodities trader Zhuhai Zhenrong – will resume its vessel building and maintenance business and diversify into oil rig production and offshore engineering, by cooperating with Keppel, the world’s largest drilling rig maker by market share.

“The board is pleased to announce that the winding up petition has been withdrawn and the joint and several provisional liquidators have been discharged at midnight on [Thursday],” Titan said in a statement on Friday.

Withdrawal of the petition, completion of various debt restructuring agreements, various shares subscription deals and an internal control review indicating no material deficiency are among the conditions for trading to resume.

After completion of a one share-for-every three existing shares open offer at 10 HK cents a share that raised some HK$259 million, the company is now 64.7 per cent owned by GZE.

Titan shares traded at 9.8 HK cents at 10:56am, slightly below the open offer price, and 53.3 per cent below the last trading price of 21 cents before trading was halted in June 2012 pending the restructuring.

The winding up petition has been withdrawn and the joint and several provisional liquidators have been discharged
Titan statement

Holders of its various debt instruments together have a 6.5 per cent stake as a result of a debt-to-shares deal as part of the debt restructuring exercise, and Shanghai-based Chang Xin Asset Management owns 8.5 per cent of the firm.

After completing the restructuring, Titan said it would reactivate the shipbuilding and repair business at its mothballed yard in Quanzhou, Fujian, and expand into offshore and marine engineering services.

The latter involves the construction, repair, conversion and upgrading of oil rigs and other support vessels used in offshore oil and gas drilling.

Titan signed a long-term cooperation agreement two years ago with Keppel, which agreed to send managers to the shipyard to operate it, subject to Titan’s successful restructuring and the resumption of trading in its shares.

Under the deal, Keppel will earn management fees, turnover-based fees and bonuses, and would be granted bonds convertible into a 9.9 per cent equity stake in Titan.

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.