Aegean Marine Petroleum Network Inc. Friday won court approval to tap into a crucial bankruptcy financing package, which took several days to clear hurdles imposed by the court and a group of bellicose bondholders.
Judge Stuart Bernstein of the U.S. Bankruptcy Court in New York will allow the company to borrow up to $40 million of a $72 million term loan. The financing package also consists of another $460 million in revolving loans that roll up existing debt and ensure the company has plenty of liquidity to keep its business afloat while it pursues a sale. Judge Bernstein has also signed several other requests allowing Aegean to continue to pay employees and critical vendors while in bankruptcy.
Aegean, a marine fuel supplier that sought chapter 11 protection after an audit uncovered a $300 million hole in its books, kicked off a hearing on the financing Wednesday, saying it desperately needed a cash infusion to avoid collapse.
Lawyers for Aegean and its bondholders ended a hearing Thursday without an order approving the loans but said they were close to an agreement. Aegean said it needed the judge’s blessing for the financing by Friday morning in order to meet a wire transfer deadline in Europe.
Mercuria Energy Group Ltd., a Switzerland-based commodity trading company, has agreed to provide the financing.
Resistance from bondholders contributed to the delay in getting the financing package approved. Bondholders, who filed an objection shortly after Aegean landed in bankruptcy, accused Mercuria of a “loan-to-own” takeover strategy. Mercuria is also expected to serve as a so-called stalking horse, or lead bidder, in a sale of Aegean’s assets.
Abid Qureshi, a lawyer for the bondholder group, told Judge Bernstein Wednesday that Mercuria had used its position as an insider to benefit itself and to ensure the terms of the financing package weren’t properly market tested. Judge Bernstein had also expressed some skepticism about the deal, saying Wednesday that he had “a lot of problems” with the financing proposal before him.
Louis Strubeck, a lawyer for Mercuria, denied wrongdoing, calling the bondholders’ allegations “a whole lot of conjecture.”
Aegean is carrying a total of $855 million in funded debt and had $5.67 billion of revenue last year. The company sought chapter 11 protection Tuesday after accusing more than a dozen employees, including members of senior management, of orchestrating a fraud with a former affiliate.
Aegean Marine said an internal investigation determined nearly $300 million in funds was filtered to a company called OilTank Engineering & Consulting linked to a 2010 deal to build a ship-bunkering terminal in Fujairah in the United Arab Emirates.
Aegean began in 1995 as a single bunkering station in Greece, court paper say. Today its 850 employees operate a fleet of more than 50 vessels and a broad network of supply hubs, delivering fuel to customers in 21 countries.