Oil refiner Petroplus files for insolvency

ZURICH - Reuters

Petroplus has asked the stock market operator to suspend trading of its shares. AFP photo

Swiss-based oil refiner Petroplus is to file for insolvency after lenders put the company on notice to pay off its debts triggering a default on $1.75 billion of senior notes and convertible bonds.

Europe’s largest independent refiner by capacity emailed customers to say that it has halted all supplies from its Coryton refinery in England, a market source said yesterday. Clients of Coryton include oil giant BP.

The company, a casualty of falling refining margins and a high debt load resulting from its private equity-backed business model, had been locked in talks with lenders over recent weeks after they withdrew credit in December.

“We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets,” Petroplus Chief Executive Jean-Paul Vettier said in a statement. Lenders have served notices of acceleration, or demands for repayment within a limited timeframe, commenced enforcement actions and appointed a receiver for the company’s U.K. marketing arm, Petroplus said.

On Jan. 23, the company asked the Swiss stock market operator to suspend trading in its shares. Petroplus’ board is now preparing to file for insolvency in Switzerland and the group said similar steps will be taken elsewhere.

“The primary goal of Petroplus’ Board of Directors is to ensure that operations are safely shut down and to preserve value for all stakeholders,” Petroplus said.

In a market hampered by overcapacity, Petroplus’ demise could ease supply conditions and help boost margins, and competitors will be keen to jump into any gaps.