The lender led a group of banks that extended up to $500m (€444m) to Petroceltic three years ago, helping the Irish oil-and-gas explorer develop its prized gas field in the southeast of Algeria.
With the company now facing a collapse in energy prices and locked in a feud with an ex-Deutsche Bank trader-turned-activist shareholder, HSBC has sold its loans at about 30% of face value, according to people in the know.
HSBC’s soured relationship with a client it once touted on the bank’s website illustrates the boom-to-bust in energy-lending driven by falling oil prices.
While Europe’s lenders say that many of their loans are to industry giants who can ride out the slump, that still leaves $113bn in lending to minnows, wildcatters, and other junk-rated companies, Bank of America analysts wrote last month.
“A lot of these smaller, independent companies are really stressed under the current oil price,’’ said Victoria McCulloch, an energy analyst with Royal Bank of Canada, in Edinburgh. “This year is going to be tough for the banks that lent to them.”
Petroceltic applied for protection from its creditors this month. Worldview Capital Management, an activist shareholder that’s been fighting for control since 2014, purchased the majority of its $233m of outstanding debts the next day from HSBC and the International Finance Corp, a branch of the World Bank, the people said.
Worldview, controlled by a Bulgarian ex-Deutsche Bank proprietary trader, named Angelo Moskov, paid about 30 cents on the dollar for the loans, inflicting losses of about $112m on lead lender, HSBC, and IFC, according to sources.
Petroceltic’s application to seek creditor protection made prospects of repaying loans “even more uncertain” and selling out to Worldview was in the IFC’s best interests, Frederick Jones, a spokesman in Washington, said.
Much has changed since April, 2013, when Petroceltic tapped HSBC, IFC, Standard Chartered, and Nedbank Group for a debt facility to boost production in Egypt and Bulgaria, and fund development of the Ain Tsila gas field in the Algerian desert.
Natural gas prices were double their current level and oil was trading around $90 a barrel.
IFC described the deal as part of its strategy to “support companies in emerging markets with strong management teams.”
Petroceltic’s shares were suspended March 7, down 96% from two years earlier.