Hours After US Rebuke, Gunvor Secures $2.4 Billion From Banks
(Bloomberg) -- A syndicate of international banks agreed to provide commodity trader Gunvor Group with $2.4 billion in credit, with the announcement coming less than a day after the US Treasury called the company “the Kremlin’s puppet” and blocked its pursuit of Lukoil PJSC’s international assets.
It’s an initial signal that banks remain supportive of the company even after the US move. The deal largely refinances credit agreements made in prior years with European bank branches. It also follows a $2.8 billion facility Gunvor concluded with US bank branches on Thursday.
The company called the Treasury’s social media post “fundamentally misinformed and false” and said it would seek to correct a “clear misunderstanding.”
In a whirlwind week for the company, Gunvor was announced the winner of Lukoil’s sales process for its international assets and trading arm last Thursday. The deal would have catapulted the Geneva-headquartered firm to the very top ranks of the commodities trade and transformed it from a relatively asset-light trader into an integrated oil colossus.
The Treasury’s comments are likely to revive questions about its connections to Moscow at a time when many oil industry participants are wary of Russian links. Since its co-founder Gennady Timchenko was sanctioned in 2014, Chief Executive Officer Torbjörn Törnqvist bought out his Russian partner’s stake in the company. Gunvor has sold the vast bulk of it’s asset portfolio in Russia and spent years reassuring financiers over its compliance regime.
Credit is the lifeblood of commodity traders, which use the money to pay for cargoes of oil, gas and metals they ship around the world and which can cost hundreds of millions of dollars each.
The biggest traders pool together multiple banks for giant credit pools known as revolving facilities, which allow the trader to draw down or use chunks of credit for general use purposes, rather than appointing individual banks to fund specific deals.
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