Aegean Marine Petroleum has entered the twilight zone. So, too, have the banks which directly or indirectly were involved in the affair, such as the National Bank of Greece – with collateral that would have been the object of investigation – and the companies that collaborated with it with credit now find themselves exposed and are being advised to “be cautious”.

The company, which was founded by Dimitris Melissanidis, and whose stocks are traded on the New York Stock Exchange, is at the centre of attention of regulatory authorities, as it has not yet made public its balance sheet, although the NYSE deadline has passed. Shareholders and banks are trying to evaluate its real economic situation.

The great opening

The of 638mn dollars and the reserve holdings of 238mn dollars are being analysed by auditors, as is the real valuation of the company’s ships, which most likely does not cover its borrowing.

The company must not only persuade banks and auditors that its situation today is under control, but also that it can refinance the 100mn dollar convertible bond issue by November, 2018, at a difficult juncture for the company. Players in the fuel market believe that until this happens, the company’s lines of funding remain closed, with the result that liquidity is dwindling daily, as is the company’s market presence, which means its chances for survival are diminishing.

How did it reach this point? Everything began when it was accused by its own shareholders of deficient and problematic corporate governance, which was expressed through the publication of a series of letters of the “Committee of Aegean Accountability”. The Committee was established in December, 2017, by shareholders representing over 12 percent of the stock of Aegean Maritime Petroleum, led by Tyler Baron, manager of the Sentinel Rock Capital portfolio.

The fateful move

Aegean’s fateful move, which triggered a strong backlash, was the announcement of the buyout of Hellenic Environmental Centers (HEC), owned by Melissanidis.

The market reaction was immediate, as the stock’s price plummeted, falling 38 percent after the announcement.

What happened? As Tyler Barron revealed, Aegean, in order to proceed with the buyout,  intends to issue a larger number of stocks than for any other transaction in its history, at a lower price per share, formally giving Melissanidis control of the company.

There was an immediate reaction by market analysts who expressed serious reservations about the utility of the buyout of HEC and the high price that Aegean was prepared to pay.

Characteristically, in an analysis of the American investment bank Stifel, Benjamin Nolan noted that, “We see so many violations of shareholder trust in Aegean’s decision to buy Hellenic Environmental Centers (HEC), that it is hard to even fathom how any transaction could possibly be worse.”

The worst part for Aegean was the lawsuit filed against it by shareholders in a New York court.  The plaintiffs requested an emergency injunction to block Aegean Marine Petroleum Network’s buyout of HEC, charging management of a “corrupt corporate buyout”.

The involvement of the National Bank of Greece

This is where various questions arise and the involvement of the National Bank of Greece (NBG) comes in. That is because HEC, a company funded mainly by NBG, has been rumoured to have economic problems over the last years. Despite the formal exit of Melissanidis from Aegean in 2016, the transactions between the two companies increased, resulting in Aegean posing increasing demands towards HEC.

With what collateral did NBG continue the funding? Given these unfavourable developments and strong criticism, Aegean was forced into full retreat. At the end of March, it issued a statement that it is essentially canceling the HEC buyout.

The main person responsible

Hence, the lawsuit was withdrawn from the New York Federal Court, the Board was replaced, and the agreement with Melissanidis for consulting services was terminated.

There is speculation that all of the above moves were imposed by shareholders and banks in order to curb the influence of Melissanidis, whom they consider responsible for the fate of the company and the ills of its corporate governance. Coming developments are awaited with great interest.