Institutional investors to sue Morgan Stanley, Carnegie.
A group of institutional investors in OW Bunker said they plan to sue Morgan Stanley and Carnegie for about $80 million, accusing the two investment banks of misleading them ahead of the 2014 listing of the now bankrupt marine fuel oil supplier.
Denmark's OW Bunker was valued at $1 billion when it floated in March 2014, but the company filed for bankruptcy in November that year after suffering hedging losses of almost $300 million, sending shockwaves through the global shipping and oil trading industry.
"We are planning a lawsuit against the two investment banks involved in the OW Bunker IPO," Erik Bomans, partner in Deminor Recovery Services representing 30 institutional investors, told Reuters
"They had access to a lot of information, which we believe made them aware of certain problems that were not sufficiently highlighted in the IPO prospectus," Bomans said.
Prior to the IPO, Morgan Stanley had been involved in an attempt to sell OW Bunker privately, according to a 400-page report published in December 2015 by a trustee in the OW Bunker bankruptcy proceedings.
During that sales process in 2013, offers to buy OW Bunker were made at $220 million-$400 million, significantly lower than the IPO price of around $1 billion, the report stated.
Bomans declined to provide details about the planned lawsuit, but said it related to OW Bunker's fuel oil trading operations among other issues.
"(The investors) thought they were buying a totally different company than they actually ended up buying," he said.
A spokesman for Carnegie in Sweden said
"no formal claims targeting Carnegie have been made and we have nothing further to add to this."
A spokesman for Morgan Stanley in London declined to comment.
News of the lawsuit was first published on Thursday by Danish business daily Borsen. Bomans said his company normally would not announce a lawsuit before it has been filed, but was "caught a bit by surprise" by the media report.
The two banks have been notified about the plans, although the lawsuit will only be filed in Denmark within
the next couple of weeks, Bomans said.
A group of investors, including two of the largest pension funds in Denmark, ATP and PFA, is already waging a legal campaign against the former management of OW Bunker for allegedly misleading them in the 2014 IPO.
Denmark's state prosecutor last month charged the former manager of OW Bunker's Singapore subsidiary with fraud but cleared the Danish management of any criminal wrongdoing.
Reporting by Jacob Gronholt-Pedersen