Swiss-based oil refiner Petroplus is filing for insolvency, putting over 2,000 jobs across Europe at risk, after banks called in debts, triggering a $1.75-billion (U.S.) default.
Europe's largest independent refiner by capacity has been teetering since its lenders restricted credit late last year, a victim of thin refining margins and high debt that was a result of its private equity-backed, acquisition-based business model.
In an e-mail to customers seen by Reuters on Tuesday, Petroplus said it has halted all supplies from its Coryton refinery in southern England.
However, a spokesman for the Department of Energy and Climate Change said the Coryton refinery remains operational. The plant is a major fuel supplier to the South East.
Petroplus earlier this month stopped production at three refineries in Switzerland, France and Belgium and halved output from plants in Britain and Germany as it struggled to pay for crude.
"We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets," Petroplus Chief Executive Jean-Paul Vettier said in a statement on Tuesday.
Petroplus' board is now preparing to file for insolvency in Switzerland, the group said. PriceWaterhouseCoopers was appointed administrator of the company's U.K. unit on Tuesday.
"The primary goal of Petroplus' Board of Directors is to ensure that operations are safely shut down and to preserve value for all stakeholders," Petroplus said.
Shares in Petroplus plunged more than 80 per cent to 0.23 Swiss francs. A year earlier they were trading close to 15 francs.
According to the U.K. Petroleum Industry Association, Coryton accounts for 10 per cent of the U.K. fuels market and 20 per cent of the market in the South East.
A spokeswoman for oil major BP, a customer of Coryton said: "There are no immediate supply issues across our retail network."
Petroplus's announcement had little impact on gasoline prices.
In a market hampered by overcapacity the demise of Petroplus, whose five European refineries have combined throughput of some 667,0000 barrels per day, could ease supply conditions and help boost margins. Competitors, such as India's Essar which operates a refinery in the north of England, will be keen to jump into any gaps.
Petroplus has $600-million of senior notes due in 2014, $600-million senior notes due in 2017, and $400-million senior notes due in 2019. It also has a $150-million convertible bond due in 2015 and a $500-million convertible bond due in 2013.