CAO admits US$550 million loss from speculative derivatives
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SINGAPORE : China Aviation Oil has acknowledged that it had suffered a staggering US$550 million, or about S$900 million, in losses from speculative oil derivatives trading.
Trading in the counter has been suspended since Monday pending the announcement.
China Aviation Oil will propose a plan for creditors to pay its debts and it is asking the High Court to help fix a meeting with creditors.
For now, it is suspending its chief executive Chen Jiulin and has formed a special task force to lead the company.
And it is waiting for a report of a special investigation into those losses conducted by PriceWaterhouseCoopers.
Meantime, its parent company has approached investment firm Temasek Holdings to participate in the proposed restructuring of the company.
Temasek currently has a 2 percent interest in China Aviation Oil.
In its statement, China Aviation Oil says Temasek has expressed an indicative interest in exploring participation as an investor in the restructuring efforts.
Earlier on Tuesday, even as the markets waited for the statement, other developments also surfaced.
It looks like the Singapore Petroleum Corp deal is not the only one being scuttled; two other recent deals may be in jeopardy.
One is CAO's S$90 million deal to buy a 24.5 percent stake in South China Bluesky Aviation Oil.
The Britain-based energy firm Fortune Oil, which currently owns the stake, said it was in talks to establish how recent events may affect the deal.
And it said it "had the right not to proceed with the Bluesky disposal."
There are also reports that China Aviation Oil has withdrawn from a S$229 million oil storage project.
The project, a joint venture with Emirates National Oil Company, was to be built on Jurong Island petrochemical hub by early 2006.
Meanwhile the Singapore Exchange says it is concerned about the latest developments at China Aviation Oil and is monitoring the situation closely.
It has directed China Aviation Oil to appoint PricewaterhouseCoopers as special auditor, and would like to get to the bottom of the matter as soon as possible.
SGX says the developments at CAO are specific to the company and cannot be extended to any other firm.
It has advised the market to consider each company, be it local or foreign, on its own merits. - CNA -
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i can read all these for myself in cna, sti, zaobao and watever other news sites
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Originally posted by FireIce:i can read all these for myself in cna, sti, zaobao and watever other news sites
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Lucky didn't buy CAO
This counter only rise by speculation
And now made a heavy loss (Must have been too much)
But sad to many who brought 100 lots of CAO -
I calculated, CAO must have speculated in millions of barrel of crude oil!