Geneva - Oil trader Gunvor Group is suing Cerberus
Capital Management, alleging that the private-equity firm is refusing to pay
its share of costs incurred when the two companies made a failed $650 million
bid for Chevron assets in South Africa.
While a relatively small amount of money is at stake, the
suit sheds light on the acquisition campaign now under way after Gunvor sold
the bulk of its Russian assets following the 2014 US sanctioning of its
co-founder, billionaire Gennady Timchenko.
Gunvor claims it entered into an agreement with Cerberus
in September to prepare a joint bid for the Chevron assets and that Cerberus
agreed to pay half the cost of evaluating an offer, according to the documents
filed in New York Supreme Court.
Gunvor said it spent about $1.6 million hiring advisers
and consultants to help it perform due diligence on the assets, which include a
refinery in Cape Town, a lubricants plant in Durban and about 800 service
stations. Gunvor provided all of its due-diligence materials to Cerberus and
the two companies teamed to make a bid “approaching $650 million,” according to
the claim. The offer, which was submitted to Chevron’s banker on Cerberus
letterhead, was rejected by Chevron soon after it was made, Gunvor said.
Cerberus has refused to “honor its obligations” under a
September written agreement to pay for half of the due-diligence costs, Gunvor
said in the claim, which alleges breach of contract and is seeking $829 020.
“The lawsuit is without merit and we intend to defend it
vigorously,” Winnie Lerner, a spokeswoman for Cerberus in New York, said
by phone.
Seeking partners
The claim confirms that Gunvor, one of the world’s
largest independent oil traders, is looking to partner with outside investors
such as private equity to fund deals in much the same way that larger rivals
Vitol Group and Trafigura Group have structured transactions in the Middle
East, Africa and Brazil.
After initially claiming that the cost-sharing provisions
weren’t binding, Cerberus has now taken the position that the parties didn’t
submit a joint bid as defined by their agreement, Gunvor said in the claim.
No statement of defense has been filed and none of the
allegations has been proved in court.
Seth Pietras, a spokesman for Gunvor in Geneva, declined
to comment on the matter.
Vitol Group and China Petroleum & Chemical Corp. are
the two final bidders competing to buy Chevron’s South African assets, people
familiar with the matter said last month.
French oil major Total was also involved in the process,
according to the same people. Chevron plans to make a decision in coming weeks,
though sale talks could still falter, the people said.
BLOOMBERG