FAL Oil Co., a United Arab Emirates- based energy trader that’s under U.S. financial restrictions for links to Iran, suspended debt restructuring talks with lenders on Dec. 10, a company official said.
The trader of marine fuel and other refined products is working on a business plan that would allow it to resume talks with lenders later this month, said the official who is involved in the financing process and asked not to be identified by name because of company policy.
FAL Oil, based in the U.A.E. emirate of Sharjah, is seeking to revive fuel supply agreements with regional state refiners to show lenders it would be able to generate income and allow it to reach a debt repayment agreement, the official said. Companies that FAL is approaching include refiners in Sri Lanka, India and Bangladesh as well as in the Horn of Africa, the official said.
Energy-trading companies faced additional cash-flow difficulties since the global financial crisis began in 2008 because banks restricted lending amid rising commodity prices. FAL, once one of the largest ship-fuel suppliers in the U.A.E., is trying to extend maturity of about $700 million of loans that are already in default.
Debt restructuring talks with 14 lenders foundered last month as the company needs to raise about $300 million to $400 million in working capital from the creditors to continue operations, the FAL official said.
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