After final approval by a Swedish judge, Nynas AB is scheduled next month to officially exit from court-protected reorganization with much less debt, new owners and the ability to process feedstock other than the Venezuelan crude that exposed it to United States sanctions.
The District Court of Sodertorn, Sweden, decided on Monday that the reorganization is complete, following a meeting where creditors accepted a company proposal for restructuring debt. The court’s decision will take effect Dec. 21, and thereafter Nynas will no longer be limited by the reorganization regulations.
The company said it will emerge as a stronger organization with secured financing to last five years and a stronger balance sheet. The debt restructuring arrangement – referred to as a composition plan – reduced the amount owed to banks and GPB Energy, Nynas’ main creditors, by more than 3 billion krona ($352 million). Those creditors agreed to accept 25% of the money owed to them immediately or 65% within five years.
The total debt covered by the composition plan is SEK 9.2 billion, and other creditors will be repaid in full either immediately or within a year.
Nynas’ ownership has been largely reshaped since it filed for reorganization in December of 2019. At that time Petroleos de Venezuela S.A. owned 50.001% of the Stockholm, Sweden-based joint venture, but PdVSA sold a 35% share in May to a Swedish foundation in order to lower its ownership under the threshold that would trigger U.S. sanctions aimed at punishing the administration of Venezuelan President Nicolas Maduro. Nynas had blamed those sanctions for the financial problems that forced it to file for reorganization.
Then in September Finnish refiner Neste, which had been PdVSA’s partner, sold its share to Bitumina, a bitumen producer based in the United Arab Emirates.
One of the world’s largest suppliers of naphthenic base stocks, Nynas said in a press release Monday that its main achievement during the reorganization process was the successful shift to a new blend of feedstock during the past year.
“This was necessary due to U.S. sanctions against the export of Venezuelan crude, which used to be a major feedstock for the company,” Nynas stated in a news release. “Several new feedstocks have now been approved and processed following an impressive change program at the refineries and our supply chain. Nynas can now run our refineries with 100% non-Venezuelan feedstocks without affecting the strict demands of our consistent product quality. All necessary permits from the authorities needed for running new feedstocks have been secured.” The company claimed it adapted product recipes at record speed and had obtained approvals from its customers around the world.
“Following ownership changes, Nynas has no longer been subject to U.S. sanction regulations since May,” the company stated. “This has meant that the company has been able to contract crude oil deliveries and to continue financing discussions under more favorable terms.” Nynas said it managed to secure good liquidity and cash flow through a significant reduction in overdue customer payments, a granted deferral of tax payments and an agreement on inventory financing.
Nynas President and CEO Bo Askvik said in the news release that the company is eager to move forward. “We are ready to take back lost market share and more,” Askvik said. “Our brand is still strong, and this is the result of efforts made by the loyal and hardworking staff in Nynas. I would also like to express that we are sincerely grateful for the support received from our customers and suppliers.”