Aegean expects to write off $200m and take legal action

$200m of accounts receivable owed to be written off; Audit Committee looks set to recommend claims against parties involved.

Image credit: Aegean Marine Petroleum

Updated on 05 Jun 2018 07:33 GMT

Aegean Marine Petroleum Network Inc. has announced that, based on the preliminary findings of an internal review, it believes approximately $200 million of accounts receivable owed to the company at December 31, 2017, will need to be written off.

The amount is currently due from four counterparties that were reflected in the company's financial statements at the end of last year, Aegean noted.

The quantities due from the four firms was said to be approximately $172m at the end of 2016 and $85m as at December 31, 2015.

Aegean explained that the transactions "may have been, in full or in part, without economic substance and improperly accounted for in contravention of the Company's normal policies and procedures".

As a result, the bunker seller says its Audit Committee - which is now solely comprised of the three recently elected independent members of the board, Tyler Baron, Raymond Bartoszek, and Donald Moore - expects to recommend that claims be pursued against "individuals and entities involved in the transactions".

"A number of individuals employed by the Company across multiple functions who are believed to have been involved in the Transactions have been terminated or placed on administrative leave pending the outcome of the investigation.

"The Company has reported its preliminary findings to the SEC and the Department of Justice and intends to cooperate with any resulting investigations," Aegean said.

Audit Committee review and filing of annual report

Aegean previously confirmed to the SEC at the end of April that it would not be filing its annual report for the year ended December 31, 2017 by the prescribed April 30 due date for filing - because it required more time.

It came just over a month after the appointment of Pavlos Papageorgiou as its new chief financial officer (CFO), succeeding Spyros Gianniotis.

Then, on May 22, Aegean confirmed that its Audit Committee was conducting a review of certain matters relevant to the preparation and completion of its annual financial statements, and that it would not be able to file its annual report (on Form 20-F) until after the Audit Committee completed its review.

Aegean's comprehensive strategic and operational review includes an evaluation of its physical assets and the capital efficiency of every business activity in which the firm is engaged and each port in which it operates.

Discussing the impact of the latest findings on its financials, Aegean said: "At this time, the Company cannot determine the full impact on the financial statements or how this adjustment will be recorded. In addition, there could be other adjustments that result from the Audit Committee's review that could impact the financial statements."

Chairman Donald Moore remarked: "The new Board is taking all necessary actions to improve financial and operating performance and enhance both transparency and corporate governance in order to deliver value to our shareholders and other stakeholders."