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CAO Corp staves off liquidation China Aviation Oil Corp (Singapore), which lost US$550 million in speculative trading last year, has averted liquidation after the majority of creditors accepted its debt-restructuring plan yesterday. The Singapore-listed company won the support from creditors hours after it announced that its suspended Chief Executive Officer (CEO) Chen Jiulin and other four company officials were arrested. On a creditor meeting yesterday, 89 of 92 creditors accepted the company's debt-payment proposal, CAO's spokesman Gerald Woon told reporters in Singapore. The agreement concludes seven months of negotiations with creditors since CAO revealed its huge losses. The company would go bankrupt should it fail to win votes from half of its 126 creditors to support its debt-payment plan at the creditors meeting. "It is great news for CAO as it can soon resume business and move on after the debt-restructuring plan is passed," a Singapore-based oil trader told China Daily. CAO offered an improved debt-restructuring plan last month after most creditors rejected the original plan which, they believe, pays back too few. The new plan offered creditors a debt payment of US$275 million, increasing the debt payment rate to 54 per cent from the 41.5 per cent its previous proposal offered. The company owes 126 creditors US$510 million. CAO used to be the dominate Chinese jet-fuel importer. The company sought the court protection after losing US$560 million last year in speculative oil trading. It is the largest financial scandal in Singapore since the collapse of Baring Bank in 1995. In a statement yesterday, CAO said its suspended CEO Chen Jiulin, 43, may be prosecuted for 15 offences. Three of its non-executive directors, Jia Changbin, Li Yongji and Gu Yanfe will also be charged for failing to disclose to the board and the Singapore Exchange Limited (SGX) the losses during the option trading. Jia, president of the State-owned China Aviation Holding Company, parent company of CAO is also charged with insider trading with respect to the placement of 15 per cent of the shares in CAO. Court documents in Singapore shows that the parent company was aware of the financial problems in CAO when it sold a 15-per-cent stake in the troubled CAO for US$108 million in October. Peter Lim Tiong Sun, head of CAO's finance division, has also been notified that he may be prosecuted, the statement said. The five officials will appear in court today to answer the charges. "The arrest of the independent directors serves as a lesson for Singapore-listed Chinese companies to improve corporate governance," said the Singapore oil trader. "The independent directors are reminded that they are supposed to shoulder their responsibilities, rather than work as a rubber stamp." In another statement yesterday, CAO said creditor Satya Capital Ltd, a Hong Kong-based investment company, agreed to settle a legal dispute with CAO and its parent. Under the settlement, Satya accepted a claim of US$28 million and joined other creditors in the debt-payment plan, the company said. |
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