Cosco Shipping International hit by alleged debt fraud from Coastal Oil liquidation

The ship services arm of China Cosco Shipping Corporation said in a statement to the Hong Kong Stock Exchange that a number of banks have demanded repayment of alleged debts owed by Sinfeng Marine Services to Coastal Oil.

“Based on preliminiary assessment, the management of Sinfeng is of the view that the documents in relation to almost all of the alleged debts are not genuine,” Cosco Shipping International asserted.

Coastal Oil, which has filed for liquidation on 13 December last year, is a major bunker fuel supplier of Sinfeng. Sinfeng is mainly engaged in the supply and trading of marine fuel with network covering major ports such as Singapore and in Malaysia.

For the financial year ended 31 December 2017 and financials for the six months ended 30 June 2018, revenue generated from Sinfeng represented approximately 66% and 69%, respectively, of the revenue of Cosco Shipping International for the same respective periods.

“The management of Sinfeng has been using its best endeavours to identify alternative suppliers to Coastal Oil Singapore and will conduct a review of the business operations of Sinfeng (…),” Cosco Shipping International stated.

"The board expects that the revenue of the group will decrease significantly unless and until alternative suppliers to Coastal Oil Singapore are identified. However, in light of the insignificant profit contribution of Sinfeng, the board currently does not foresee any material adverse impact on the group as a result of the liquidation of Coastal Oil Singapore,” it added.

According to documents obtained by specialist bunker media Manifold Times, Coastal Oil Singapore owes a total debt of approximately $357m to 79 companies. Of the total, banks were the hardest hit taking up about $354m.