Chinese state energy company Sinopec is in early-stage talks with debt-laden Hin Leong Trading to buy a stake in an oil storage terminal that is partly owned by the Singapore trader, according to Reuters.
The sale could provide much needed cash for family-owned Hin Leong, one of Asia’s biggest independent traders.
The company owes a total of US$3.85 billion to 23 banks, according to a Hin Leong presentation to lenders on April 14 contained in the court filing, which was reviewed by Reuters but has not been made public.
Sinopec, Asia’s largest refiner, was approached by Hin Leong earlier this month to look at investing in the Universal Terminal in Singapore, said one Beijing-based Sinopec official.
Hin Leong’s founder Lim Oon Kuin and his family own 41% of the terminal through Universal Group Holdings Pte Ltd. PetroChina holds 25% and Australian investment bank Macquarie the remaining 34%.
Hin Leong and Sinopec did not respond to requests for comment.
A previous sale of a stake in the terminal in 2016 valued the whole terminal at more than US$1.5 billion, industry sources said at the time.
Sinopec, which owns several storage facilities outside China – in Rotterdam, Antwerp and Fujairah – has long been looking for more storage sites to boost its global trading profile, the company official said.
The Chinese state oil giant, however, would be cautious about any possible investment given growing internal scrutiny over spending after a plunge in oil prices, and is closely monitoring developments around Hin Leong’s debts, the official added.
‘Sinopec is aware of the good asset quality of Universal Terminal, but the question is at what price and if the terminal can come clean of creditors’ debt claims,’ said the official.
Of Hin Leong Group’s assets, which also include about 130 oil tankers, the stake in Universal Terminal is the most attractive to potential investors, trade sources said.
He added the terminal has the only independently owned supertanker jetty on Jurong Island, which is the only access point to Singapore’s rock caverns, Southeast Asia’s first underground oil storage facility.