Denmark’s two largest pensions institutions, ATP and PFA, have finally accepted a settlement in their legal battle for compensation following the collapse of Danish shipping fuel firm OW Bunker back in 2014 — and have formalised lessons learned into a list of principles around initial public offerings (IPOs).
The pension funds announced yesterday afternoon: “In the group of linked cases involving the bankrupt OW Bunker the significant professional parties, including the private equity fund Altor, the investment banks, and both the Danish and the foreign institutional investors that bought shares in connection with and after the IPO of the company in the spring of 2014, have reached a settlement.”
OW Bunker went bankrupt in November 2014 after suffering significant losses on derivatives and a loss on a subsidiary’s biggest customer in Singapore, PFA and ATP said.
The DKK710bn (€95.2bn) statutory pension fund ATP, and the DKK778bn commercial pension provider PFA – alongside 22 other Danish institutional investors – brought two actions for damages in 2016 and 2017 against OW Bunker, its former management and board of birectors, Altor Fund II and the investment banks Carnegie and Morgan Stanley.
“The subject matter of the complex and significant legal actions was prospectus liability in connection with the IPO, and liability for failing to comply with the disclosure requirements in the time leading up to the bankruptcy of the company,” the parties said.
Several non-Danish institutional investors represented by the company Deminor and an association of Danish private investors also sued for damages concerning prospectus liability against several of the same defendants.
“In the settlement, the plaintiffs in the four legal actions are compensated for losses suffered on the investment in OW Bunker with an aggregate amount of approximately DKK645m, including costs relating to the case,” the pension funds and Altor said in a joint statement.
Tomas Krüger Andersen, ATP’s head of legal in its pensions and investments department, said the Hillerød-based pension fund was pleased it had reached a settlement.
The settlement, to be shared between many parties, appears to fall well short of the overall sums which had been claimed, according to information in a Q1 2024 stock exchange filing document by Morgan Stanley. IPE has contacted ATP and PFA for comment on the adequacy of the settlement.
In yesterday’s statement, Krüger Andersen said: ”The judgment from the Eastern High Court is currently not expected before 2026 after 100 days in court, and it is likely that a judgment would be appealed to the Supreme Court, adding even more years before a final judgment would be obtained.
“The costs of this would run into millions. It would not be in our members’ interest,” he said.
Rasmus Bessing, managing director of ESG investing and co-CIO of PFA Asset Management, said that as investors, PFA had to be able to rely on the listed companies in which it invested customers’ money to “provide timely, full and accurate information to us and the rest of the market”.
“It has been important for us to get this message across with the OW Bunker actions,” he said.
In that vein, shortly after announcing the settlement, ATP and PFA jointly published a set of principles for their future participation in IPOs.
”Based on the unfortunate case concerning OW Bunker, we have had a desire to influence the Danish stock market in a positive direction,” Krüger Andersen said.
The first point in the list of principles, for example, is that any stock exchange candidate should seek to act as a listed company as early as possible, publishing the same information that a listed business would have to reveal.
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