The Gunvor Group faces substantial financial challenges, including a debt-to-equity ratio of 11x and significant vulnerabilities in its operational and credit structure, caused by the lack of transparency with counterparties. In 2022, Gunvor closed a $1.45 billion uncommitted credit facility and a $990 million off-balance sheet financing deal, while consistently defaulting on LNG cargo deliveries. The company's financial disclosures have been inadequate, raising concerns about its creditworthiness and operational stability in the current market.

1. GUNVOR GROUP: Kredit Analyse
4/11/2022 By Jacques S. Energy Risk Professional (ERP®)
SUMMARY
● The lack of visibility given to the counterparties by Gunvor is posing a major
obstacle for an investor à la ADNOC to determine the group value.
● Gunvor USA has closed $1.45B “uncommitted” credit: an uncommitted facility
loan that once signed, does not oblige the lenders to provide the funds to the
borrower… previously it signed a near $1B in off-balance sheet financing facility.
● *****Muriel Anouk Scwab, CFO is on “sabbatical leave”.
● Gunvor Group poses substantial risks to the Swiss banking and financing sector:
By the derivatives even if Gunvor survives, the debt to equity is now 11X.
● It is a less than $1B balance-sheet carrying billions of MTM derivatives contracts
84% of its cash is generated by a debt-inflow.
● In Houston, in New York no market participants can sell to Gunvor on
open-account terms. L/Cs must be confirmed only: the bank issuing the credit
for a party willing to deal with Gunvor needs a second bank to cover the default
risk. This is a huge blow: it comes with additional costs for the trader.
FINANCIAL OVERVIEW
Gunvor Group has released FY21 and FY22 results, floating numbers without providing
the financial statements that couldn’t be verified by the market participants.
Only H12021 had been released, thus Gunvor Group creditworthiness should be
evaluated on that basis.
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2. Then we can fit the counterparty credit assessment with the recent Russia
developments throttling the gas markets.
REVERSE CASH-FLOWS
213.10 NI
377.00 DEPRECIATION
(404.00)
NET WORKING capital
CHANGE
186.10
Reverse Operating
Cash-flows $M
H1 2021 H2 2020
Cash and Cash Equivalent 1,352 806
increase 546
reverse operating cash-flows 186
difference (360)
The group debt financing parties are seen by Gunvor as capital manufacturers to =>
finance its equity, not necessarily the cash-flows by its LNG/gas p&L.
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3. Gunvor Group: Where the trader source its cash-generation** see appendix
GUNVOR CLEAN EQUITY
● Gunvor had $310M worth of repurchase agreements (repos) for natural gas
positions.
● Carries Ust-Luga (russian asset) as “asset for sale”.
● Had a $424M other receivables (loans) with its shareholder ( 87% is Torbjörn
Törnqvist).
The firm “debt-to-arrive equity” is -1.725 B$ for H12021 and Gunvor carries this load
forward into 22.
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4. Net equity $M (a) $2,517.60
Contingencies
Diff between real cash vs
operating cash-flows (360.18)
UST-LUGA russian write-off (631.00)
other receivables loan to
shareholders (424.00)
Natural gas repo facility
(off-balance sheet) (990.00)
Debt-to-Arrive Equity (b) (2,405.18)
Restated Net Equity (a)+
(b) 112.42
Basis H12021
2021 implied margin call on
TTF by new debt intake (c) (2,500.00)
Basis 2022 $ (2,387.58)
Post the H2-2021 TTF LNG violences the margin calls have been said to be -$2.5B by
the CIBs and at this moment Gunvor Group has drawn in the unutilised portion of the
$17.8B RCFs (revolving credit facilities).
This “fix” is added back to the firm “debt-to-arrive equity and we pencil Gunvor at
-$2.387B basis 2022 net worth.
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5. 5

6. LEVERAGE AND FUNDING
By the derivatives only, even if Gunvor survives daily, their debt to equity is now 11X.
It is a less than $1B balance-sheet carrying billions of MTM derivatives contracts, mostly
LNG & Natural gas hedges.
Short-term liabilities are 86% of the group balance-sheet financing. If Gunvor Group
marked UST-LUGA at $631M as 77% of their assets in 2020, by interpolation
short-term liabilities comprise now +90% of the balance-sheet financing and 92% of
Gunvor net assets are now trading contracts.
The only cash on the table ( unrestricted, not at the brokers) is $395.50M. The
company has no or few assets.
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7. PHYSICAL MARKET
Is there a problem at Gunvor ? The banks won’t open a letter of credit for a client to
finance a sale with o/a terms and Gunvor USA as a buyer.
This raises the cost of doing volume for them and puts them at the back of the bus vs
Mercuria/Vitol and Motiva.
Credit speaks: they are seen as the weakest link of the physical market.
Gunvor USA has closed a $1.45B facility “uncommitted”.
The uncommitted tell that it does not oblige the lenders to provide the funds to the
borrower. It’s a big nuance.
In 2022, the group has signed a $990M off-balance sheet financing facility up from
the previous $300M that they attributed to natural gas repos with CPs.
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8. *$726 million record net income for year 2021 backs out to about $2.21B in ebitda but
even this number seems inadequate to balance the required journal entries. Gunvor
Group in 2021 is a $10,187 net debt entity.
Net debt= Gross debt -Cash + Restricted cash - journal entries
Net debt= Gross Debt- Cash + Restricted Cash + (reverse operating cash-flows -
stated cash-flows) + other receivables loan to the shareholders + Natural Gas repo
facilities + UST-LUGA write off + TTF MC paid with the RCFs.
SWISS FINANCIAL SECTOR EXPOSURE TO GUNVOR GROUP
The top 3 local capital suppliers exposure with Gunvor Geneva LNG P&L are:
● Zürcher Kantonalbank
● UBS
● BCV Banque Cantonale Vaudoise
POV
Be cynical: Gunvor has made the claim to have doubled up in one year their net worth
but they have made it impossible to verify these claims.
We posit the natural gas MC on TTF has been settled with new debt but the only
released balance-sheet is up to June 2021.
At this time, it is not clear how Gunvor finds money or pivots to the Arab world.
Arabic people are the toughest negotiators on earth and know the mathematics, Abu
Dhabi or any equity buyer solicited by Gunvor Group for an entity stake will need the
FY21 plus the FY 22 results to make the adjustments.
Some of the aforementioned balance-sheet problems predate FY22. To carry them they
are going to have to pay a little bit more: LIBOR + the idiosyncratic.
Because Gunvor and his accountant disclose information to no people in and outside
the company a premium by the banks should be billed to Gunvor Group to compensate
for these risks. For the financial institutions we deem appropriate to make the money
$$$. ST financing is the first and last resort and Gunvor Group returns for its “fix”.
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9. PRESS REVIEW
18/10/21
Counterparty Gunvor linked to a $2.5B trading margin call on TTF.
https:///2021/10/18/cash-strapped-gunvor-lives-by-the-sword-with-a-2-5b-margin-call/
13/10/21
The banks financing gas & energy trade won’t open a letter of credit to finance a sale to Gunvor on o/a
terms.
Gunvor denying margin calls reports and blame attacks from competitors
https://gunvorgroup.com/news/gunvor-statement-2/
12/10.21
Gunvor Group failure to deliver 2 LNG cargoes. They blame their default on a U.S supplier Freeport
https://www.naturalgasworld.com › gunvor-defaults-on-ln...
Q4 2021
"Ice Clear Europe issued $5.4 billion variation margin (VM) call in the fourth quarter of 2021 to a clearing
member.https://www.risk.net/risk-quantum/7946371/ice-clear-europe-issued-54bn-vm-call-in-q4
28/09/21
Gunvor USA under investigation for kickbacks
https://www.reuters.com/business/energyecuador-dealings-2021-09-28/
19.04/22
Gunvor report $726 million net income for year 2021
https://gunvorgroup.com/news/gunvor-group-2021-results/#:~:text=Volumes%3A%20240%20million%20
MT,after%20taxes%3A%20US%20%24726%20million
27/4/22
CFO Muriel Anouk Schwab quit Gunvor
https://www.tradewindsnews.com/people/gunvor-bring
28/3/22
Gunvor Again Defaulting on LNG Cargo Deliveries
https://propakistani.pk/2022/03/28/gas-crisis-looms-over-pakistan-as-gunvor-again-defaults-on-lng-cargo-
deliveries/
7/07/22
Gunvor declares record unaudited profits for H1 2022, but the trader selects partial results.
https://www.ft.com/content/72c22e4a-55e6-4207-8df3-b92f8624f5a5
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10. Gunvor refuses to provide the full financial disclosure such as a balance-sheet or income statements to
the regular banks and gas trading counterparties …
19/09/22
Gunvor marks its 33% investment Signal Peak at $62M in 2020 it paid $400M in 2011
U.S. Attorney’s Office has called Signal Peak “a den of thievery” for executives who engaged in a number
of activities including tax evasion, cocaine trafficking, firearms violations, bribery and money laundering.
https://missoulacurrent.com/deq-mine-permit/
21/09/22
Gunvor for sale
https://www.ft.com/content/2835b518-d899-4861-a249-691fedc144
13/10/22
Gunvor International BV, losing arbitration for years of overcharges to a client
https://www.dawn.com/news/1714775
13/07/22
Gunvor signed $990M off-balance sheet financing facility
https://www.gtreview.com/news/global/gunvor-signs-oversubscribed-us990mn-revolving-credit-facility
/#:~:text=Commodity%20trader%20Gunvor%20has%20significantly,was%20heavily%20oversubscribed
%20after%20syndication.
12/10/22
Gunvor USA closes $1.45B “uncommitted” credit.
https://www.globalcapital.com/article/2avar8z7rg6q5lxm8j1ts/syndicated-loans/gunvor-secures-1-45bn-loa
n-with-accordion-feature-for-us-subsidiary
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11. APPENDIX
Gunvor Group: Where the trader source its cash-generation**
1,291.55 Debt inflow
104.90 Other LT liabilities
(424.00)
other receivables loan
to shareholders
(34.00) Bonus plan
938.45
Reverse Financing
Cash-flows $M
904.45
Reverse Operating
Cash-flows $M
1,124.55 sum
11

12. Debt inflow as % total cash
flows
Operating Cash-Flow
as total cash-flows
83.45% 16.55%
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13. 13

14. 14

15. 15

16. 16

17. Gunvor Implied Fitch Rating and Debt:
H1-2021 FY2021
liquidity contengencies
FITCH defined working capital 935.04
FFO* (158.84)
Gross net debt 6,357.00 6,357.00
Diff between real cash vs operating
cash-flows 360.18
other receivables loan to shareholders 424.00
Natural gas repo facility (off-balance sheet) 990.00
UST-LUGA russian write-off 631.00
TTF MC (paid with RCFs) 2500
Cash equivalents 1,352.50 1,352.50
Cash restricted in brokers accounts 957 957
Unrestricted cash 395.50 395.50
Net debt 5,961.50 10,866.68
ebitda 1344 2251
Net debt / ebitda 4.436 4.756
FFO/NET DEBT -0.027
In red: journal entries
* reverse operating cash-flows h1-2021
re-annualized
**$726 million net income for year 2021
backed out-to- 2251 FY ebidta
CC: very high levels of credit risk, a restructuring of some kind appears probable.
Net debt $10.86B
In red: the journal entries that are required..
* reverse operating cash-flows h1-2021 re-annualized
**$726 million net income for year 2021 backed out-to- 2251 FY21 ebitda
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18. DISCLOSURE: AS OF 14/11/22 WE NO POSITIONS IN LNG/GAS.
WE COULD HAVE A CONFLICT OF INTEREST BY MARKET MAKING AGAINST IN ONE OR
MANY MARKETS GUNVOR IS TRADING. -JACQUES S. GARP Energy Risk Professional
(ERP®)
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