Swedish naphthenic base oil manufacturer Nynas AB has filed for company reorganisation at Sweden’s Södertörn District Court. The company says its loans have not been extended by banks and since it cannot pay due debts, it has to apply for a reorganisation.
Meanwhile, it has formulated a proposal as a result of the ongoing negotiations between major creditors, and the composition contains two alternatives with regards to their concessions. It offers all unsecured creditors the following composition:
· All creditors will receive payment of SEK100,000 or the lower amount of their claim, including accrued interest, to be paid immediately after the composition has become legally binding.
· All creditors with claims remaining after receiving payment of SEK100,000 will receive full payment within 12 months after the composition has become legally binding. Creditors under this section will participate in voting on the composition, due to the creditor’s concessions in the form of postponed payment and forgiveness of interest.
· The composition is conditioned upon that the Lenders and GPB jointly declare to accept either a composition of 25% on their remaining claims in excess of SEK 26.5 million, to be paid within 12 months of the composition becoming legally binding. Alternatively, accept a higher composition of up to 65%, but with a significantly longer credit period meaning that 36% is converted into long-term senior loans with a maturity of 5 years at the earliest after the composition has become legally binding and 29% converted into subordinated hybrid instruments.
Nynas financial difficulties, that led to the company reorganisation, originate from the US trade sanctions against Nynas’ 50% shareholder, Venezuelan state oil company PDVSA. The US sanctions have eroded Nynas profitability over time. Due to PDVSA’s ownership, Nynas has been affected by the US financial restrictions since August 2017.
Finland’s Neste, a minority-owner of Nynas with a 49.99% ownership, has fully written-off its investment in the third quarter of 2019.
Recently, the company has also been stopped from buying crude oil from Venezuela which has been replaced with other crude oils. This has resulted in increased raw material costs. As a result of the sanctions, the company had high financial prices and lost business because of the sanctions. Now, a situation has arisen where there is no longer a continuous financing of the company’s operations.
This has put Nynas in a difficult situation and with the shareholders’ support, a plan has been drawn up with the objective to get Nynas completely out of the sanctions in early 2020. A strategic three-year plan to achieve better profitability has also been developed and Nynas is also implementing changes in the raw material mix to the refineries.
The banks that have been financing the business for a long period have chosen, in their current form, not to support the company’s change work. As a result, Nynas has no option but to request a company reorganisation.
The administrators of Nynas AB during the company reorganisation are Mikael Kubu, Ackordscentralen Stockholm AB and Lars Eric Gustafsson, Advokatfirman Schjødt.
The company was founded in 1928 and Nynas played a major role in the development of mobility in Sweden for many decades. In the early 1980s, operations were fundamentally changed, fuel production ceased and investment in specialty oils for various industrial applications and bitumen for asphalt began. Nynas is a world leader in its fields, with exports products all over the world. It employs 1,000 people, about half of whom are in Sweden. Production takes place in three own refineries in Nynäshamn, Gothenburg and Hamburg, Germany, as well as in a jointly owned refinery in the UK.