Chinese oil trader Guangdong Zhenrong Energy offers lifeline to Titan Petrochemicals Group

Chinese oil trader Guangdong Zhenrong Energy Co. has offered to take control of debt-laden shipping and oil storage firm Titan Petrochemicals Group Ltd., which is facing a liquidation suit from U.S. private equity firm Warburg Pincus.
Zhenrong, which is controlled by Zhuhai Zhenrong Co., is one of China’s largest traders of crude oil and oil products. Titan is in talks to sell a controlling stake after having suffered losses for five consecutive years, following a downturn in the shipping industry.
Warburg Pincus filed a petition in a Bermuda court earlier this month seeking to wind up Titan, which had assets of HK$6.4 billion (US$825 million) at the end of last year, while current liabilities reached HK$7.7 billion. Warburg, which holds a stake in Titan of around 10%, has invested more than US$215 million in the company.
Under the proposal, Guangdong Zhenrong would pay up to HK$200 million (US$25.8 million) to take a stake in Titan of at least 51%. Zhenrong would also set aside up to US$145 million to buy Warburg Pincus’ interest, and provide Titan with interim financing of up to US$40 million.
The acquisition of Titan would allow Zhenrong to make use of Titan’s oil storage facilities in Guangdong, Fujian, Shanghai and Shandong. Zhenrong’s investment is subject to an adjournment and eventual withdrawal of Warburg Pincus’ winding-up proceedings against Titan and the receipt of a waiver to exempt it from making a general offer for all of Titan.