China Aviation unveils debt payment plan
SINGAPORE - Embattled China Aviation Oil, China's largest jet fuel supplier, unveiled a new debt restructuring scheme Thursday, saying its state-owned parent company and the Singapore government's investment arm would inject equity to help pay creditors ¡ª owed more than half a billion U.S. dollars after risky oil bets.
Andrew Grimmett ¡ª a director at Deloitte & Touche Financial Services, which has handled the restructuring ¡ª said the company's parent, China Aviation Oil Holding Co., and Singapore's Temasek Holdings are in discussions on how much each would contribute. He declined to comment further.
Grimmett couldn't say whether Temasek's commitment was guaranteed, but added "we wouldn't put this scheme forward if we weren't confident of raising the equity."
All creditors have been provided a draft of the company's new restructuring proposal, and a meeting with creditors is scheduled for June 10, he said.
China Aviation Oil (Singapore) said it would increase its debt recovery value from $220 million to $275 million, and its mainland parent will guarantee the price as well as interest payments on deferred debt.
An earlier scheme didn't include a guarantee from China Aviation Oil Holdings Co., the Beijing-backed parent company.
The company's abrupt downfall has been a major embarrassment for China and its state-backed companies, many of whom are trying to burnish their reputations.
Singapore authorities opened a criminal investigation into China Aviation and its former director, Chen Jiulin, last year, after the company shocked markets by revealing it had lost more than $500 million by placing bets on the future price of oil. It began losing money in the first quarter of 2004 and sought court protection in December.
There are currently about 90 creditors, and the number could rise to more than 100, Grimmett said.
China Aviation's spectacular collapse is the biggest financial scandal to hit Singapore since the fall of Britain's Barings Bank 10 years ago, when rogue trader Nick Leeson rang up nearly $2 billion worth of losses in market gambles.