Europe's largest independent oil refiner Petroplus said yesterday that lenders had frozen about $1 billion (Dh3.67 billion) in credit lines, threatening its ability to purchase crude.
The Swiss firm, which operates five refineries, said $1 billion in uncommitted lines was "critical" to allow the company's operating units to meet their obligations when due.
Petroplus did not disclose the reason for the freeze but the action comes against the backdrop of the Eurozone crisis and banks tightening lending conditions.
The firm has $1.1 billion in committed credit lines, but with only half its credit facility available, it says the move will have a swift impact.
"It is not a matter of weeks. It is something we need to solve in the coming days," head of investor relations Fredrik Olsson told AFP.
"If we can't buy crude, then of course there will no crude for the refineries. It's of course something that impacts quickly."
Negotiations to continue
Petroplus owns and operates the Coryton refinery in Britain, the Antwerp refinery in Belgium, France's Petit Couronne refinery, the Ingolstadt refinery in Germany and Switzerland's Cressier refinery, with a combined capacity of about 667,000 barrels per day.
The announcement will be of concern to the company's 2,500 workers.
"We are no longer currently able to buy oil, when usually we buy 500,000 barrels per day," chief financial officer Joseph Watson told the AWP fin-ancial news agency earlier yesterday.
"We have a serious problem," he said. "To maintain our activities we need all our credit lines."
The company said in a statement it would continue negotiating with the banks to get its credit lines restored and was looking at "additional strategic options to maintain operations in its European refining and marketing system".
Petroplus had discussed with lenders options "to reduce their risk" and had asked for time to put this into place, Olsson said.
"Unfortunately they did not agree on this," he said. "It's of course something we regret." The company's shares plummeted following the announcement, dropping 36.4 per cent to 2.18 Swiss francs towards 1130 GMT. "Today's announcement is a serious issue," said Vontobel bank analyst Andreas Escher. "We strongly advise investors to stay clear of the stock until sustainable financing can be restored."
- $1.1b: committed credit which is half the requirement
- 2,500: workers to be affected by fund crunch