Warburg sues Titan Petrochemicals in Hong Kong

Saturn Storage, a Warburg-owned vehicle that invested in Titan, alleges that the company, its founder Tsoi Tin Chun and two other executives secretly provided RMB1.48 billion ($232 million) of unauthorized guarantees to subsidiaries. This led to significant unspecified damages and potential liabilities.

Warburg has invested more than $215 million in Titan since 2007 and currently holds a stake of around 10%. The company reported an annual net loss of HK$783.3 million ($101 million) for the most recent fiscal year and its shares were suspended from trading on June 19 after falling 50% over the previous 12 months, cutting its market value to HK$1.92 billion. Titan hasn't turned a profit in five years and assets exceeded liabilities by HK$1.24 billion at the end of last year.

In the last month, vehicles controlled by the private equity firm have sought to exercise redemption rights on shares and convertible notes collectively worth more than HK$2 billion in Titan entities. They subsequently requested the entities be wound up.

The first of these petitions, made by Saturn Storage to the Eastern Caribbean Supreme Court in the British Virgin Islands, was heard last week. The court ordered the liquidation of a subsidiary through which Titan controls its China onshore storage business.

Despite this setback, Titan says that Guangdong Zhenrong Energy, which has offered to pay HK$150-200 million for at least 51% of the company, remains interested. Zhenrong is also prepared to provide up to HK$320 million in interim financing and pay HK$1.13 billion for Warburg's interests in the company.

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• Topics
• Greater China
• Regulation
• Industrials
• Restructuring
• Warburg Pincus Asia
• China
• Logistics
• Distress
• Commodities