Petroplus filing for insolvency

Swiss-based oil refiner Petroplus is to file for insolvency after lenders put the company on notice to pay off its debts triggering a default on $1.75 billion of senior notes and convertible bonds. Europe's largest independent refiner by capacity emailed customers to say that it has halted all supplies from its Coryton refinery in England, a market source said on Tuesday. Clients of Coryton include oil major BP. The company, a casualty of falling refining margins and a high debt load resulting from its private equity-backed business model, had been locked in talks with lenders over recent weeks after they withdrew credit in December. "We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets," Petroplus Chief Executive Jean-Paul Vettier said in a statement. Lenders have served notices of acceleration, or demands for repayment within a limited timeframe, commenced enforcement actions and appointed a receiver for the company's UK marketing arm, Petroplus said. On Monday, the company asked the Swiss stock market operator to suspend trading in its shares. Petroplus' board is now preparing to file for insolvency in Switzerland and the group said similar steps will be taken elsewhere. "The primary goal of Petroplus' Board of Directors is to ensure that operations are safely shut down and to preserve value for all stakeholders," Petroplus said. In a market hampered by overcapacity, Petroplus' demise could ease supply conditions and help boost margins, and competitors will be keen to jump into any gaps. "Essar's Stanlow refinery is operating as normal and if there are opportunities to fill gaps in the market caused by the absence of Coryton we would obviously look to do so," said a spokesman for the Indian energy group. Petroplus has $600 million of senior notes due in 2014, $600 million senior notes due in 2017, and $400 million senior notes due in 2019. It also has a $150 million convertible bond due in 2015 and a $500 million convertible bond due in 2013. The company, whose five European refineries have a combined throughput capacity of some 667,0000 barrels per day, was forced to cut production at three plants and more than halve output at two others as it struggled to pay for crude.