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 same day five of its officials were arrested by
Singapore police.
"It is great news for CAO as it can soon resume business and
move on," a Singapore-based oil trader told China Daily,
who said the arrests remind independent directors that "they are
supposed to shoulder their responsibilities, rather than work as a
rubber stamp."
The Singapore-listed company won the support of creditors hours
after its suspended CEO Chen Jiulin and four other company
officials were arrested.
At a creditors' meeting yesterday, 89 out of 92 accepted the
company's debt-payment proposal, CAO's spokesperson Gerald Woon
told reporters in Singapore.
The agreement concludes seven months of negotiations since CAO
revealed huge losses. It would have gone bankrupt if it failed to
win votes from half of its 126 creditors for its debt-payment
plan.
CAO offered an improved debt-restructuring plan last month after
most creditors rejected the original one. The new plan offered
creditors a debt payment of US$275 million, increasing the debt
payment rate from 41.5 to 54 percent.
The company, which used to be the dominant Chinese jet-fuel
importer, owes US$510 million. It sought court protection after
losing US$560 million last year in speculative oil trading, the
largest financial scandal in Singapore since the collapse of
Barings Bank in 1995.
In a statement yesterday, CAO said Chen, 43, may be prosecuted
for 15 offences.
Three non-executive directors, Jia Changbin, Li Yongji and Gu
Yanfei will also be charged for failing to disclose to the board
and Singapore Exchange Limited (SGX) the losses during the options
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 percent of CAO
shares.
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.
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.
(China Daily June 9, 2005)