New York-listed Aegean Marine Petroleum said it may need to write off as much as $200 million owed to the company, adding to uncertainty over the future of one of the world’s largest bunker fuel suppliers.
Aegean, in a statement late on Monday, said it was owed the money by four counterparties, mostly from transactions dating back to 2015 and 2016.
“The transactions that gave rise to the accounts receivable may have been, in full or in part, without economic substance and improperly accounted for,” Aegean said. “At this time, the company cannot determine the full impact on the financial statements or how this adjustment will be recorded.”
Aegean missed an April 30 deadline to file its 2017 annual report to the US Securities and Exchange Commission, saying it expected a significant change in results from the previous year and needed more time to review its financial statements.
“Preliminary findings” of a review of its finances since then has revealed the suspect transactions, Aegean said Monday, adding that several employees involved in them have been fired or placed on administrative leave.
The company has reported its preliminary findings to the SEC and the US Department of Justice, and will cooperate with any resultant investigations, it said. S&P Global Platts marine credit division Ocean Intelligence downgraded Aegean’s credit score to “Trading not advised on any basis” in a report published Tuesday.
“The announcement of this bad debt is deeply troubling for those with exposure to Aegean,” Simon Millar, Managing Analyst for Ocean Intelligence in Singapore, said. “We believe that until further clarity is offered on how the debt will affect its business going forward, Aegean presents a higher-than-average risk to both sales and purchases.”
A spokeswoman for ABN Amro, one of Aegean’s key lenders, declined to comment on whether its relationship with the bunker supplier would continue. Bunker market participants were already increasingly wary of Aegean after it missed its SEC deadline and subsequently cut credit terms for back-to-back bunker trades.
“People already gave less business to them when the rumors started, and now with $200 million missing and the share price tanking, more people will look for an alternative,” one buyer said Tuesday.
Another buyer said it would continue to purchase from Aegean in ports where the company was a physical supplier, but would now avoid buying from them on a back-to-back basis. A supplier said it was only selling to Aegean on a prepayment basis. Aegean is among the world’s largest bunker suppliers.
Its marine fuel sales in 2016 accounted for more than 5% of the estimated 250 million-285 million mt sold globally that year. The company had previously downsized operations in certain markets, while continuing to restructure its operations globally and cut costs where possible.
After exiting the Singapore bunker market as a physical supplier in January, Aegean said it would trim its marine fuel operations in Fujairah in March.
The missed SEC deadline left Aegean no longer in compliance with the New York Stock Exchange’s listing requirements, and it was given a new deadline of six months from April 30 to file the report.
Ocean Intelligence previously downgraded Aegean’s credit score on May 15, to “Credit a matter of trust in Principals”, from “Good for credit to US$7.5 million”