Published June 25, 2009

Chemoil founder's family may sell stake

Glencore said to be in driving seat to pick up 51% share

By VINCENT WEE

	Email this article
	Print article
	Feedback

(SINGAPORE) Chemoil founder Robert Chandran's family members may finally be able to divest their majority stake in the company they inherited from him. Reuters yesterday reported that the family is in talks with top commodity trader Glencore to sell its 51 per cent share in the marine fuel supplier.

'All Chemoil developments of material nature will be announced in a timely manner as guided by (SGX's) regulations on disclosure.' - Chemoil, in response to an SGX query

Chemoil shares closed almost 20 per cent higher at 43 US cents on the news, causing Singapore Exchange (SGX) to query the company on the price spike.

Reuters quoted sources as saying that Glencore is the frontrunner in the bid for the Chandran family's stake in the company worth US$240 million. The family has reportedly been trying to offload its stake for at least a year, after founding chairman Mr Chandran was killed in a helicopter crash in January last year.

Glencore is believed to be the only one left in negotiations after a bidding process which began in February as Europe-based oil trader Vitol dropped out.

'It is highly inappropriate for us to comment or speculate on any of our shareholders' activities. As in the past, all Chemoil developments of material nature will be announced in a timely manner as guided by (the Singapore Exchange's) regulations on disclosure,' said a Chemoil spokeswoman. 'We have nothing material to disclose at this time,' she added.

'The company is aware of various reports concerning parties who may be interested in acquiring a shareholding stake in the company,' Chemoil said in response to the SGX query. Neither confirming nor denying the reports, it added: 'If and when a material corporate development should occur, the company will, in compliance with the SGX-ST Listing Manual, make the appropriate announcement.'

'It's possible because it's a related core business as they are also in energy and Glencore doesn't have its own storage so it does make sense,' said one big player in the marine fuels business. He did not see much change to the local market if the deal were to take place, however. 'I think it'll still be status quo for the market because there is no additional tankage coming in but just a transfer of ownership,' he added.

Buying Chemoil would give Glencore the former's lucrative US marine fuels business and fuel storage assets in Singapore, Asia and the Middle East, strengthening its physical trading options at a time when global storage tanks are at a premium.

Japan's Itochu, through Itochu Corp and Itochu Petroleum, holds a combined 37.5 per cent stake in Chemoil which has a free float of 11.69 per cent.

Itochu Petroleum, along with Chemoil and Brazil's Petrobras, now occupies the Helios terminal in Singapore, having taken up tankage for its fuel oil trading business a month ago. Glencore has leased three floating storage facilities with a combined capacity of more than 800,000 cubic metres offshore Malaysia.

The additional storage capacity that it controls itself would give Glencore an advantage in the oil trading market as it would be able store and load their cargoes according to trading conditions.