China Aviation seeks rescue deal

Scandal-hit jet fuel supplier China Aviation Oil has offered to repay its creditors $220m (£117m) of the $550m it lost on trading in oil futures.

The firm said it hoped to pay $100m now and another $120m over eight years. With assets of $200m and liabilities totalling $648m, it needs creditors' backing for the offer to avoid going into bankruptcy. The trading scandal is the biggest to hit Singapore since the $1.2bn collapse of Barings Bank in 1995. Chen Jiulin, chief executive of China Aviation Oil (CAO), was arrested by at Changi Airport by Singapore police on 8 December. He was returning from China, where he had headed when CAO announced its trading debacle in late-November. The firm had been betting heavily on a fall in the price of oil during October, but prices rose sharply instead.

Among the creditors whose backing CAO needs for its restructuring plan are banking giants such as Barclay's Capital and Sumitomo Mitsui, as well as South Korean firm SK Energy. Of the immediate payment, the firm - China's biggest jet fuel supplier - said it would be paying $30m out of its own resources. The rest would come from its parent company, China Aviation Oil Holding Company in Beijing. The holding company, owned by the Chinese government, holds most of CAO's Singapore-listed shares. It cut its holding from 75% to 60% on 20 October.
