Commodity Trader GP Global Seeking to Sell Assets to Repay Banks
(Bloomberg) -- GP Global Group, a United Arab Emirates-based commodities firm, is seeking to sell oil-storage terminals, fuel barges and other assets to repay creditors after trying unsuccessfully to find a buyer for its trading units, according to people involved.
A restructuring adviser is reviewing offers for parts or all of the business and may recommend a deal this month, the people said, asking not to be identified because the information is confidential. Geneva-based Mercuria Energy Trading SA is among firms that have expressed interest, according to people familiar with the situation, one of whom said the two sides were far apart on a potential valuation.
Mercuria declined to comment. A spokesperson for GP Global said all options are on the table and that the company is looking for the one that will yield the best result for its creditors.
Commodity trading companies worldwide are struggling as the coronavirus saps economies and depresses demand for fuel and other primary products. Adding to their pain is a shortage of credit since several specialized lenders, including ABN Amro Bank NV, BNP Paribas SA and Societe Generale SA, began reducing their exposure to the industry.
GP Global is shutting down trading desks after banks pulled financing amid the pandemic. Lenders have more than $1 billion in exposure to the firm, people with knowledge of the situation said earlier this month.
Oil is down 39% this year, and Brent crude settled below $40 a barrel on Tuesday for the first time since mid-June. Bank of America Merrill Lynch estimates that global oil demand will need three years to recover from the impact of Covid-19, assuming researchers find a vaccine or a cure.
Known as Gulf Petrochem Group until 2018, GP Global said in July it was restructuring its finances after lenders withdrew credit lines. It appointed London-based Quantuma LLP as an adviser in August.
The trader operates a tank farm at the Middle East trading hub of Fujairah, with 412,000 cubic meters of capacity to store and blend fuels. It also has 200,000 cubic meters of storage and a 9,000-barrel-a-day refinery at the port of Hamriyah in the UAE emirate of Sharjah.
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