European Bank Files Motion Against SemGroup

The situation continues to worsen for SemGroup.  A major European bank says unauthorized trading by the Tulsa-based company contributed to its financial woes.

Wednesday, July 30th 2008, 10:11 pm

By: News On 6


The situation continues to worsen for SemGroup.  A major European bank says unauthorized trading by the Tulsa-based company contributed to its financial woes.  The News On 6's Chris Wright reports SemGroup has claimed its $2.4 billion in losses were due, in large part, to tough market conditions.  But, new documents claim the company also has itself to blame.

The problems for now-bankrupt SemGroup continue to pile up.  RZB, one of the largest banks in Austria, and one of SemGroup's creditors, outlined new accusations in a motion filed in bankruptcy court.

The bank says it has learned from the Blackstone Group, which is the company's investments bankers, as well as Capstone, its financial advisors, that SemGroup was using its lenders' money to engage in unauthorized speculative trading, trading that violated the company's policies.

This contradicts the Ronan Declaration, made by acting president Terrence Ronan, which says SemGroup suffered from "exposure to recent extreme volatility in commodity prices.  This has been compounded by the ever-tightening and volatile credit and financing markets."

In its filing, RZB says the Ronan Declaration contains material omissions and is therefore misleading.  The Ronan Declaration makes it seem as if the debtors were blameless victims of market volatility. 

Oil industry experts say the Austrian bank may be on to something.

"For a company like SemGroup that's involved in just transportation, gathering, storage and terminalling, you wonder how that would occur.  And, that would occur with speculative trades occurring on the future exchanges," said Andrew Lipow with Lipow Oil Associates.

Former SemGroup CEO Tom Kivisto has endured much of the blame for the alleged improper trading.  Bankruptcy documents say he borrowed millions from the company to make personal trades.  But, RZB claims that, given how much SemGroup lost, it believes others may have been involved.

RZB is also opposed to a $250 million bankruptcy financing package proposed by Bank of America.  That money would allow SemGroup to continue operating.

logo

Get The Daily Update!

Be among the first to get breaking news, weather, and general news updates from News on 6 delivered right to your inbox!

More Like This

July 30th, 2008

March 14th, 2024

December 4th, 2023

September 25th, 2023

Top Headlines

March 28th, 2024

March 28th, 2024

March 28th, 2024

March 28th, 2024