Shale oil producer Viru Keemia Grupp (VKG) reported its first ever full-year loss, along with a 14% drop in revenue. The company also restructured €211.9m of loans in March this year.
VKG’s business year 2015 ended on a loss of €32m, compared to a profit of €20m the preceding year. Revenue dropped by 14% from €195m in 2014 to €167m in 2015. Its output of shale oil meanwhile hit a new all-time high at 506,000 tons, which is 17% more than in 2014.
“For the first time in the company’s 17-year history, we ended a financial year with a loss,” the company stated, adding that no dividends would be paid for 2015.
The world market price of oil had a significant impact on the company’s operations in the last financial year, since more than half of the group’s revenue directly depends on it, the company added.
“In the present market situation and given the rigid resources and environmental policy, this was a rather predictable result and we were ready for it,” CEO of VKG Ahti Asmann said in a press release.
“The management of the group has taken a number of steps to secure the financial situation – by cutting operating and capital costs, optimizing production, reviewing investment plans and restructuring loans,” he said.
Asmann added that VKG would continue to develop strategic projects aimed at environmental sustainability, increasing energy efficiency, lowering the cost price of output, and ensuring long-term financial stability.
Almost €212m worth of loans restructured
At the beginning of 2015, VKG had a syndicated loan agreement with SEB, Nordea and Pohjola as well as a separate loan agreement with the European Bank for Reconstruction and Development (EBRD). The difficulties caused by falling oil prices raised many questions on the part of the banks, but owing to the company’s prompt response it was able to fulfill all the conditions set out in the loan agreements, VKG’s board stated in the company’s annual report.
The syndicate issued an additional loan in the amount of €19m to VKG to complete investment in its third Petroter shale oil plant. Despite this, EBRD suspended its payments, which according to VKG’s board was “an unpleasant surprise”.
VKG entered into talks with EBRD, but received only €1.9m of a promised credit line of €16.6m last year, the annual report states. Because of the equal treatment principle, the syndicate also stopped its payouts. In September VKG started negotiations to restructure the loans.
An agreement was reached in December 2015. The company restructured loans totalling €211.9m, of which the syndicate's share was €191.7m and that of EBRD €20.2m. The deadline of the restructured loan is Dec. 31, 2019, but under the agreement fixed payments are spread over a period of 17 years, so a one-off payment of a larger amount will be made on the deadline date.
The restructuring agreements were signed on March 23, 2016.
Editor: Editor: Dario Cavegn