Danish Fuel Supplier OW Bunker Collapses Months After Its IPO

When fuel supplier OW Bunker went public in March, raising $530 million on the Copenhagen stock exchange, investors cheered: The shares rose as much as 19 percent during the first day of trading. At the beginning of November, the company’s prospects still looked good. Its share of the $150 billion market for bunker fuel—the heavy crude that powers oil tankers, container ships, and other vessels—was 10 percent and growing. Less than a week later, the company filed for bankruptcy in Copenhagen; it will be liquidated, undone by a client that it says didn’t pay a $125 million bill and by an ill-timed bet that oil prices would rise. Selling fuel on credit “is common practice,” says Jens Maul Jorgensen, chairman of the U.K.-based International Bunker Industry Association (IBIA). “If this could happen to OW Bunker, it can happen to anyone.”

Known for campaigning against corruption in the industry, OW Bunker was apparently unable to prevent bad judgment by its own employees. Members of its board have claimed that two managers at its Singapore subsidiary, Dynamic Oil Trading, exceeded their credit limits by continuing to sell fuel to a struggling trader, Tankoil Marine Services. A spokesman for the Danish public prosecutor says his office is trying to determine if it has jurisdiction and whether it should conduct an investigation. Both employees deny any wrongdoing, and no charges have been filed against them. Tankoil couldn’t be reached for comment.