Agritrade is urging three major banks to accept a new offer from a London-based investment manager, rather than push ahead with a winding up order against the scandal-hit commodities trader.
It emerged in February that Singapore-based Agritrade had run into financial difficulties, and in late March the company had been placed under judicial management with a reported US$1.55bn of outstanding liabilities to dozens of lenders.
Court documents filed by banks accused it of “massive, premeditated and systematic” fraud, including seeking financing multiple times over on single trades. The collapse subsequently turned out to be one of a string of scandals affecting the city state’s commodities trading houses.
ING Bank, Natixis and Commerzbank – which together are owed a combined total of over US$200mn – are currently seeking a winding up order against Agritrade.
However, according to court documents filed last week and seen by GTR, the company has recently been approached by Nithia Capital Resources Advisors about a potential investment.
Headquartered in north-west London, Nithia Capital’s promotional material says it specialises in turning around underperforming assets, and is currently looking to build an industrial portfolio in emerging markets. The company did not respond when contacted by GTR.
Agritrade chief executive Ng Xinwei says that under the proposed deal Nithia Capital would acquire a majority controlling interest in Agritrade Resources – a subsidiary of Agritrade International that focuses primarily on production and logistics.
According to Nithia Capital’s term sheet, also seen by GTR, it would then make up to US$35mn available to repay creditors of Agritrade International, either in cash or a combination of cash and convertible debentures in Agritrade Resources.
Ng says that Nithia Capital has expressed a particular interest in a power plant Agritrade acquired in 2018 as “an undervalued, underperforming asset with a significant upside potential to be realised if managed carefully”. There is also interest in floating Agritrade Resources as a listed company.
Under the terms of the proposed investment, Ng would remain involved in the management of Agritrade Resources as a director and banks would need to agree to drop attempts to declare him bankrupt.
Ng reports that Nithia Capital “does not want a bankrupt person managing their assets, especially one who cannot act as a director of [Agritrade Resources] and its subsidiaries”.
He adds that his role would include enhancing the value of Agritrade Resources assets and sourcing investors interested in acquiring them, and that he is seeking a commission or success fee of 3-5% of any profits from those sales.
Noting that those assets are “potentially worth substantial sums”, he says he is “prepared to pass on a significant portion of these fees to my creditors, as well as a percentage of my salary and any bonus received”.
It is not uncommon for a firm undergoing restructuring to be approached by potential investors, and the documents suggest that another earlier offer from another firm, Suncity-Rothstar, also remains on the table.
Ng says he has always believed that a “comprehensive restructuring… with the help of a white knight investor” would be the best way to preserve Agritrade Resources’ value and secure a better payout for Agritrade International’s creditors.
However, there is a significant gap between the US$35mn promised to repay creditors, and the extent of creditors’ exposure to Agritrade.
The court documents show ING, Natixis and Commerzbank are claiming US$97mn, US$67mn and US$40mn respectively. The full list of unsecured creditors reveals a total exposure of US$917mn, with two banks – Malayan Banking Berhad and United Overseas Bank – each seeking more than US$100mn.
Supply chain finance provider Greensill also has an outstanding claim of just under US$30mn, excluding interest, fees, costs and expenses.