Aegean Marine Petroleum (ANW) Believes $200 Million of Accounts Receivable Owed to Company Will Need to be Written Off
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Aegean Marine Petroleum Network Inc. (NYSE: ANW), a leading international marine fuel logistics company, today provided an update on its ongoing internal review by the audit committee of the Company’s Board of Directors (the “Audit Committee”).
As previously disclosed, Aegean reported in a Form 6-K filed with the U.S. Securities and Exchange Commission (“SEC”) on May 21, 2018 that the Audit Committee, is conducting a review of certain matters relevant to the preparation and completion of the Company’s annual financial statements for the year ended December 31, 2017. The Audit Committee, which is now solely comprised of the three recently elected independent members of the Board, previously retained independent legal counsel to assist with this review.
Based on the preliminary findings of the review, the Audit Committee believes that approximately $200 million of accounts receivable owed to the Company at December 31, 2017 will need to be written off. These amounts are currently due from four counterparties that were reflected in the Company’s financial statements as of December 31, 2017. There was approximately $172 million as of December 31, 2016 and $85 million as of December 31, 2015 due from these four counterparties. The transactions that gave rise to the accounts receivable (“the Transactions”) may have been, in full or in part, without economic substance and improperly accounted for in contravention of the Company’s normal policies and procedures.
At this time, the Company cannot determine the full impact on the financial statements or how this adjustment will be recorded. In addition, there could be other adjustments that result from the Audit Committee’s review that could impact the financial statements.
“Under the guidance of a reinvigorated Board, independent Audit Committee, and refreshed management team, Aegean continues to make progress in working through its annual reporting process and ongoing review of historical financial reporting,” said Donald Moore, Chairman of the Board. “The new Board is taking all necessary actions to improve financial and operating performance and enhance both transparency and corporate governance in order to deliver value to our shareholders and other stakeholders.”
As previously announced, the Board has directed management to conduct a comprehensive strategic and operational review focused on maximizing profitability and return on capital. This includes an evaluation of the Company’s physical assets, existing footprint, and the capital efficiency of every business activity in which the Company is engaged and each port in which it operates.
Mr. Moore continued, “We thank our employees for their continued dedication and our new and existing customers and suppliers for their continued support. We are confident that Aegean is moving toward its goal of being the leader in the physical supply and marketing of marine fuel.”
The Audit Committee is continuing its review and investigation of the Transactions and other matters, with the assistance of independent counsel and forensic accounting advisors, and expects to recommend to the Company that it pursue claims against individuals and entities involved in the Transactions. The Audit Committee is taking all the necessary and appropriate steps to identify weaknesses in the Company’s internal controls and remedy any such weaknesses. A number of individuals employed by the Company across multiple functions who are believed to have been involved in the Transactions have been terminated or placed on administrative leave pending the outcome of the investigation. The Company has reported its preliminary findings to the SEC and the Department of Justice and intends to cooperate with any resulting investigations. The Company does not intend to provide an update on this process until the review is completed.
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