More than two dozen Danish investors, among them pension giants ATP, PFA and PensionDanmark, have decided to sue failed marine fuels firm OW Bunker and Altor, a Swedish private equity firm that was majority owner of the firm, for DKK800m (€107m) in damages.
The legal proceedings follow a probe by the investors to find out what went wrong at the firm. OW Bunker declared bankruptcy in November 2014, or just six months after an initial public offering (IPO) in which Altor reduced its majority stake in the firm and in which the 27 investors bought shares.
In a statement , the investors said: “The investigation focussed on errors and flaws in the prospectus prepared in connection with OW Bunker’s IPO, liability in connection with the offering and the sale of shares in OW Bunker as well as the management’s liability for OW Bunker’s operations in the period from the IPO until the bankruptcy.”
Following the probe, the investors said they would file two lawsuits seeking a total of DKK800m in compensation. The first suit concerns prospectus liability and will be brought against OW Bunker, former managers at the firm as well as “relevant Altor entities.”
The prospectus for OW Bunker’s IPO, in which it was valued at $1bn (€893m), does not mention Dynamic Oil Trading, a Singapore affiliate where, according to Danish press reports, fraud took place. The alleged fraud, along with a sharp decline in fuel prices in the summer of 2014, contributed to the firm’s bankruptcy.
The investors’ second suit concerns liability for non-compliance with disclosure obligations under Danish securities law and will be brought against OW Bunker and former managers at the firm.The law firm Bruun & Hjejle is representing the investors, with the auditing firm KPMG providing assistance.
Said Kenneth Joensen, ATP’s General Counsel: “It is our duty to recover as much as possible of the losses incurred as a result of OW Bunker’s bankruptcy. This was a highly negative event on the Danish stock market, and there is a strong need for clarifying the events preceding the bankruptcy and determining responsibility.”
“This was a highly negative event on the Danish stock market.”
Anders Damgaard, Chief Investment Officer at PFA Pension, noted that “it shouldn’t have been possible for OW Bunker to go bankrupt just six months after the IPO.” The lawsuits were therefore necessary to get compensation for PFA’s members and to ensure that something like this does not happen again, said Damgaard.
Contacted by Responsible Investor, a spokesman for Stockholm-based Altor said his firm couldn’t comment on the lawsuit as it had not seen it yet. “We don’t know which Altor entities are named, so we don’t have any comment at this time,” the spokesman said. Altor owned 35% of OW Bunker when it went bankrupt.
Beyond the three big schemes, the investors taking action against OW Bunker and Altor include other Danish responsible investors like Unipension Invest, DIP, JØP and AP Pension.