As the company works with its lenders on a ‘consensual restructuring’ plan, it has announced the appointment of a new management team – which no longer includes Lim Oon Kuin or family members – and it is focusing on an ‘orderly divestment and rightsizing of its fleet to achieve optimum returns to all stakeholders’.
As previously reported, yesterday Xihe said that court proceedings had been adjourned while it works with its lenders on a mutually agreed restructuring programme.
Last week the Oversea-Chinese Banking Corporation (OCBC) filed an affidavit with the Singapore High Court requesting judicial managers to be appointed for Xihe Holdings and four vessel-owning subsidiaries to ‘investigate ‘serious irregularities and prevent further prejudice to creditors.
In May representatives of EY were appointed as interim managers of Ocean Tankers, a company which, like Xihe Holdings, is owned by the Lim family.
The move followed the revelations in early April that a number of financial institutions, including OCBC, had refused to issue new letters of credit to another Lim-owned company, the trading firm Hin Leong, because it could no longer service its debts.
Other financial institutions said to have exposure to Hin Leong include HSBC Holdings and DBS Group Holdings. The banks’ combined exposure is estimated to be at least $3 billion.
Hin Leong’s founder, OK Lim, is also said to have instructed the company’s accounts team not to disclose around $800 million in futures trading losses
In today’s update, Xihe announced the appointment of a new management team, which includes Interim CEO Kenny Lim, Commercial Director, Desmond Chong, Sales & Purchase Director, Michael Tan and VP (Fleet Management), Capt. Zhang Yujie.
Xihe owns around 140 vessels across the oil tanker segment, and the new management team is said to have made ‘significant strides’ in managing the business over the past two months.
A number of bareboat charter contracts which Xihe had entered into with Ocean Tankers and Hin Leong have been terminated, and Xihe says it is actively working with the interim judicial managers of Ocean Tankers and Hin Leong to seek redelivery of these vessels (a majority of which have yet to be redelivered).
Xihe says ‘there is a market for chartering out these vessels’ and it is pursuing opportunities to re-deploy them.
In terms of ‘rightsizing’ its fleet, the company says several of its vessels have already been sold and it is in discussions with potential buyers on further divestments.
In another development, Xihe says it has ‘identified strategic partners to form alliances with'.
It notes that it has ‘engaged, and will be engaging professional, internationally renowned technical and commercial managers to manage and market its vessels for charter, to ensure that the highest standards of safety, quality and efficiency are attained’.
This week, Xihe took redelivery of its 108,953 DWT oil tanker Ocean Queen from Hin Leon as bareboat charterer and Ocean Tankers as ship manager.
The vessel is now said to be under the technical management of ‘a newly appointed world-class ship manager’.