GP Global asset sale talks drag on valuation gap

Dubai-based commodity trading firm GP Global has yet to make significant progress in talks to sell off its assets, refusing to countenance any kind of fire or distressed sale as it works to bridge the gap on their valuation.

Energy and commodities trading firm Mercuria, global tank storage operator Vopak, private equity investor Brookfield and private investment firm Prostar Capital are amongst companies that have likely expressed interest in GP Global assets, but the extent to which the talks have progressed remain unclear.

GP Global's M&A lead Abhishek Shah told Argus today that the firm was working closely with FTI Consulting special adviser Rod Sutton, appointed by GP Global in August as its chief restructuring officer, "on making things happen that would be most appropriate for all stakeholders".

The firm sees its restructuring process and talks with its lenders as having progressed well since it was forced into restructuring after failing to win lender backing. But GP Global is keen to ensure its assets are sold at their "right value", saying that any distressed valuation would not reflect that its UAE bunkering and other operations are currently running well. GP Global is confident that progress in talks to sell its highest value assets will be made by the end of the year.

Central to those assets are the Fujairah and Hamriyah bunkering terminals, with 412,000m³ (2.6mn bl) and 204,000m³ of storage capacity, respectively. All the Hamriyah tanks are currently leased out to third parties. It also has refining, lubricants and bitumen assets in the UAE.

The firm still plans to nearly double capacity at its 7,600 b/d Sharjah refinery which produces naphtha, gasoil, fuel oil and light cycle oil to 14,000 b/d. But the investment is contingent its restructuring and asset sales.

Having completed its purchase of a 50,000 t/yr lubricant blending plant from Nigeria's Grand Petroleum in April this year, GP Global has already invested in upgrading the facility to international quality standards. While it is on the verge of gaining all the necessary operating licences to run the unit, it has already begun production and marketing of its Hi-Speed brand of lubricants to local customers.

The firm continues to operate its Hamriyah bitumen storage terminal, as well as a speciality plant — also in Hamriyah — that produce bitumen membranes and polymer-modified bitumen (PMBs).

By Keyvan Hedvat