The joint administrators of Petroplus Refining & Marketing have published their first progress report on the administration.
The report provides creditors with a detailed description of progress that has been made in the six months since the appointment of the Administrators and includes an estimate of the likely return for creditors.
The key matters disclosed in the report are:
· It is currently estimated that the net funds available for distribution to unsecured creditors may be in the order of $102m-$135m.
· Gross realisations from the assets of the company are projected to be $199m-$209m.
· Trading losses from refining during the six-month period of administration are currently estimated at $22m-$31m, on sales of some $347m. Of this loss, some $20m relates to capital expenditure incurred and written off in the period.
· The claim against the Swiss affiliate, Petroplus Marketing AG (“PMAG”), of $450.4m has been ascribed no recovery value in the administrators’ estimates as it risks being subordinated in the PMAG Swiss insolvency proceeding.
· The dividend to unsecured creditors is currently estimated to be between 4.2% and 6.4%, based on total creditor claims of $2.1bn-$2.4bn.
· The financial outcome for creditors reflects the extensive exercise to attain best value for the creditors. Offers for the refinery assets as a going concern were materially lower than for an alternative use.
· The sale of substantially all of the refinery assets is expected to be concluded in the coming few months. The terms of this sale remain confidential.
Steven Pearson, Joint Administrator and PwC partner, said: “This has been an exceptionally difficult administration. The information we have published today illustrates the scale of financial and operational challenges we faced in operating the refinery for nearly six months.
“The unfortunate reality is that, despite rigorous cost control, the refinery incurred significant losses from operations between January and June. This high risk, low reward environment was the main driver in having to cease operations – put simply, we could not afford to incur the ongoing losses associated with continuing refining.
“Despite this, during the period since January we have explored all possible options and concluded a sale of the site and of significant assets of the company. Consistent with our statutory duties, the sale of Coryton for an alternative use represents the best possible outcome for unsecured creditors. We are now working towards meeting the conditions of the sale contract, in ensuring the site is in a stable state ahead of handover and completion.
“Operating the refinery and managing the sale and closure have been both technically complex and unusually demanding on all the people involved. I would again like to publicly thank the management, employees, contractors, suppliers, customers, the authorities and the PwC team for their commitment throughout this administration.”