Case | HBS Case Collection | August 2012 (Revised March 2013)

Preem (A)

by Bo Becker, Annelena Lobb and Aldo Sesia

Abstract

High yield bond fund Proventus Capital Partners (PCP) has invested in underwater bonds issued by Preem, a large oil refinery. As maturity approaches, in the midst of financial crisis, Preem appear unlikely to be able to refinance. Meanwhile, Prreem has a complicated multi-currency capital structure with both senior, secured bank loans and junior bonds. PCP has to decide whether to push for bankruptcy in a European court, or to push for out of court renegotiations. The case is a tool for studying the difference between liquidity problems and solvency problems, weighing bankruptcy vs. out of court restructuring, and dealing with negotiations between creditors.

Keywords: Insolvency and Bankruptcy; Financial Liquidity; Restructuring; Courts and Trials; Negotiation; Bonds; Mining Industry; Energy Industry; Europe;

Citation:

Becker, Bo, Annelena Lobb, and Aldo Sesia. "Preem (A)." Harvard Business School Case 213-008, August 2012. (Revised March 2013.)