Gunvor dodges sanction woes with new US$350m Singapore loan

Money and Oil do mix.

At first glance it looked like just another oil refinancing deal in Singapore involving the usual Singaporean based international banks and local stalwarts including DBS. But one look at the name of the oil company being refinanced, Gunvor, and it became a whole lot more interesting. Gunvor is at the centre of sanctions swirling around Russia as the G7 looks set to increase the pressure on Russia over Ukraine. The US reckons it is linkned to Russian President Vladimir Putin.

According to the New York Times, Gunvor, a Swiss-based firm that is the world’s fourth-largest oil trader and generated $91 billion in revenue last year, said it had provided documents to the Treasury Department that it said disproved any connection to Mr. Putin.

The Times reported that The C.I.A. in 2007 produced a secret assessment of Mr. Putin’s wealth that largely tracked with assertions later made publicly by a Russian political analyst who said Mr. Putin effectively controlled holdings in Gunvor, Gazprom and Surgutneftegaz that added up to about $40 billion at the time.

On March 21 sanctions were placed on Gunvor co-founder Gennady Timchenko. But so far there havent been sanctions on Gunvor itself.

So the timing of today's financing ahead of potential sanctions is very intersting. In the deal, Gunvor Singapore Pte Ltd, a wholly-owned subsidiary of Gunvor Group, has launched a US $350 mil. syndicated revolving credit facility, which will support new investments and existing operations in the Asia-Pacific.

During the last year, Gunvor launched borrowing bases dedicated to specific Asian trading, including: 1) US $510 mil. borrowing base for fuel oil trading; 2) US $255 mil. borrowing base for gasoline trading; 3) US $400 mil. borrowing base for Middle East activities.

The stand-alone Asian Facility, first launched in 2012, is now complemented by the borrowing bases, as well as Gunvor's US $500 mil. bond and the US $1.515 bil. European RCF, which had been increased significantly in December 2013. These support Gunvor's established and continuing global growth strategy, which consists of geographic expansion, product diversification, and investments along the value chain.

Bookrunners and mandated lead arrangers of the Facility refinancing are Arab Petroleum Investments Corporation, DBS Bank Ltd, First Gulf Bank PJSC, Singapore Branch, ING Bank N.V., Singapore Branch, Malayan Banking Berhad, Singapore Branch, Societe Generale Corporate & Investment Banking and ABN AMRO Bank N.V., Singapore Branch. Rabobank International joined as MLA in senior syndication.