The company that supplies most of China's jet fuel was yesterday granted a six-week extension for a restructuring plan following massive trading losses, a company lawyer said.
China Aviation Oil (Singapore) Corp (中國航油), whose parent company is owned by the Chinese government, had gone to court to seek more time after announcing last week that it had lost US$550 million in oil pricing gambles.
The Singapore High Court had initially set a Dec. 13 deadline for the restructuring plan.
"The court has given us six weeks' extension and six months to call a creditors' meeting," China Aviation's lawyer, Patrick Ang, said after an hour-long hearing.
The Singapore subsidiary had sought court protection from creditors, who had demanded payment as China Aviation's losses ballooned.
Its suspended chief, Chen Jiulin (
Also attending the court session yesterday were lawyers for the creditors, which include Mitsui & Co Energy Risk Management, Sumitomo Mitsui Banking Corp, Fortis Bank SA and Barclay's Capital PLC.
It began losing on oil derivatives in the first quarter of this year but continued to gamble that crude and jet fuel prices would fall for the rest of the year. Benchmark crude prices closed to an all-time high of US$55.17 per barrel in late October.
The extension announcement came as authorities investigated the massive losses, which have led to allegations of insider trading.
The Securities Investors Association -- an independent group which in 2002 voted China Aviation Oil the most transparent company in Singapore -- has said the losses bore the hallmarks of insider trading.
Local media have compared the case to the collapse of the UK's Barings Bank in 1995, when Singapore-based trader Nick Leeson ran up nearly US$2 billion in losses in market gambles.