A Swedish court approved an extension to Nynas AB’s reorganization last week, giving the company additional time to stabilize its operations on the path the company believes will lead it back to profitability.
Nynas, one of the world’s largest suppliers of naphthenic base stocks, filed for reorganization in Swedish court on Dec. 13. The company filed for an extension to the process shortly before it was originally set to end on March 13, and will now have until June 15 to complete the reorganization.
Nynas, a joint venture between Venezuelan national oil company Petroleos de Venezuela S.A. and Finnish refiner Neste, said United States sanctions against PdVSA also cover entities controlled at least 50 percent by PdVSA. The Venezuelan company owns 50.001 percent of Nynas.
The company said its stakeholders approved a potential change in ownership structure and sent a proposal to the United States Office of Foreign Asset Control, which issued the sanctions on PdVSA, inquiring if the change would exempt it from those sanctions. On March 12, Nynas issued a statement saying the agency had confirmed to the company that the proposed changes would exempt it from such sanctions.
Nynas has not released details on what the ownership change would entail, but any alterations would most likely leave PdVSA with less stake in the company than it currently owns. “Intense work to implement the measures and actions required to satisfy OFAC’s demands are now ongoing,” Nynas said in a March 20 statement.
The latest sanctions prevented Nynas from purchasing Venezuelan crude oil, which the company said had eroded its profits.
Nynas said its next step in the reorganization process will be to secure financing to continue its operations.
“To make planned and necessary purchases of crude oil going forward, negotiations are progressing with some of Nynas largest customers for an agreement on financing for deliveries of bitumen,” the company said. “In addition, Nynas financial advisor Carnegie Investment Bank is working in parallel on both the short- and long-term financing with potential lenders and investors.”
Companies based in Sweden that face financial trouble and want to avoid bankruptcy can file for a company reorganization, a type of administration where court-appointed administrators work to restructure the firm. Companies must be deemed to have long-term business sustainability to enter reorganization, and it is only an option if the company is unable to pay its overdue debts. The process provides conditional protection against bankruptcy and imposes a moratorium on enforcement of existing agreements.
Nynas operates two naphthenic base oil plants in Europe: a 400,000 metric tons per year facility in Nynashamn, Sweden, and a 330,000 t/y plant in Harburg, Germany.