Nynas AB regained access to its bank accounts and will pay off expenses incurred during the past month, taking a step toward recovering from financial troubles that led the company to file for reorganization protection in December, it announced last week.
Nynas, one of the worlds largest suppliers of naphthenic base stocks, filed for reorganization in Swedish court on Dec. 13. The company, a joint venture between Venezuelan national oil company Petroleos de Venezuela S.A. and Finnish refiner Neste, said United States sanctions against PdVSA in 2017 eroded its profits.
Although Nynas said it had developed a plan to return to profitability in three years, its banks were not persuaded to adjust the terms of the companys loans, and subsequently blocked and closed Nynas from its accounts.
Those bank accounts have now been reopened so Nynas can pay off certain expenses the company incurred since its reorganization on Dec. 13, the company said in a letter to its creditors published Jan. 3.
Swedish financial publication Dagens Industri said Nynass liabilities total 12.4 billion Swedish krona (U.S. $1.2 billion).
Nynas said it will pay for deliveries either in cash or in advance, and prioritize payments to creditors that deliver goods and services to Nynas, up to 3.5 million SEK, in order to ensure operations can continue during the reorganization process. The company said it expects to make those payments by the end of this week.
Under the original terms, the company could pay a maximum of 2.5 million SEK until Jan. 8, but this was extended.
Companies based in Sweden that are facing financial trouble and looking to avoid bankruptcy can file for a company reorganization, a type of administration where court-appointed administrators work to restructure the firm. Companies must be deemed to have long-term business sustainability to enter reorganization, and it is only an option if the company is unable to pay its overdue debts. The process provides conditional protection against bankruptcy and imposes a moratorium on enforcement of existing agreements.
Neste said last October that it had written off its holding in Nynas, meaning it no longer estimated its stake in Nynas to have any value.
Sales of naphthenic base oils have fallen 8 percent due to sanctions on purchases of Venezuelan crude, Nynas Vice President of Naphthenics Simon Day said.
Nynas operates two naphthenic base oil plants in Europe: a 400,000 metric tons per year one in Nynashamn, Sweden and a330,000 t/y plant in Harburg, Germany.
Nynas also holds a marketing agreement with the Isla Refineria in Curacao, though the facility hasnt produced any base stocks for at least a year due to its inability to procure crude oil. When operating, the Curacao plant has capacity to make 3,700 barrels per day of naphthenic base oils and also produces API Group I paraffinic oils. Curacao is an island located in the southern Caribbean and is a constituent country of the Netherlands.