Oil Trader Gunvor Suing Cerberus Over Failed Chevron Africa Bid

LAGOS (Capital Markets in Africa) – Oil trader Gunvor Group is suing Cerberus Capital Management alleging that the private equity firm is refusing to pay its share of costs incurred when the two companies made a failed $650 million bid for Chevron Corp. assets in South Africa.

While a relatively small amount of money is at stake, the suit sheds light on the acquisition campaign now under way after Gunvor sold the bulk of its Russian assets following the 2014 U.S. sanctioning of its co-founder, billionaire Gennady Timchenko.

Gunvor claims it entered into an agreement with Cerberus in September to prepare a joint bid for the Chevron assets and that Cerberus agreed to pay half the cost of evaluating an offer, according to the documents filed in New York Supreme Court.

Gunvor said it spent about $1.6 million hiring advisers and consultants to help it perform due diligence on the assets, which include a refinery in Cape Town, a lubricants plant in Durban and about 800 service stations. Gunvor provided all of its due diligence materials to Cerberus and the two companies teamed up to make a bid “approaching $650 million,” according to the claim. The offer, which was submitted to Chevron’s banker on Cerberus letterhead, was rejected by Chevron soon after it was made, Gunvor said.

Cerberus has refused to “honor its obligations” under a September written agreement to pay for half of the due diligence costs, Gunvor said in the claim, which alleges breach of contract and is seeking $829,020.

Seeking Partners
The claim confirms that Gunvor, one of the world’s largest independent oil traders, is looking to partner with outside investors such as private equity to fund deals in much the same way that larger rivals Vitol Group and Trafigura Group have structured transactions in the Middle East, Africa and Brazil.

Gunvor spokesman Seth Pietras in Geneva declined to comment on the matter. Cerberus’s London office referred media inquiries to its New York office, which didn’t respond to e-mailed questions outside normal office hours.

After initially claiming that the cost-sharing provisions were not binding, Cerberus has now taken the position that the parties did not submit a joint bid as defined by their agreement, Gunvor said in the claim.

No statement of defense has been filed and none of the allegations have been proved in court.

Vitol Group and China Petroleum & Chemical Corp. are the two final bidders competing to buy Chevron’s South African assets, people familiar with the matter said last month.

French oil major Total SA was also involved in the process, according to the same people. Chevron plans to make a decision in coming weeks, though sale talks could still falter, the people said.