China oil trader agrees to buy control of Warburg-sued Titan

According to a statement filed to the Hong Kong Stock Exchange, Titan plans to issue 7 billion new shares to Zhenrong at HK$0.025 each, representing nearly 90% of Titan's enlarged share capital after the offer. As part of the transaction, Zhenrong will also pay up to $145 million to buy Warburg Pincus' interest in Titan's storage companies in China.

The acquisition will be subject to a dismissal of the Warburg suit and court approval of a Titan debt restructuring plan.

Saturn Storage, a Warburg-owned vehicle that invested in Titan, sued the company and some of its executives last month for secretly providing 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 for the most recent fiscal year and its shares were suspended from trading on June 19 after falling 50% over the previous 12 months. Titan hasn't turned a profit in five years and assets exceeded liabilities by HK$1.24 billion at the end of last year.

The private equity player is said to consider the acquisition proposal to be premature and will go on with its petition to wind up Titan through a court battle, a source with direct knowledge of the matter told Reuters, adding that obtaining court approval to hire an independent liquidator would be more transparent and fair to Titan's bond holders and other creditors.

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