Arbitration Case Poses Financial Risks for Access World Logistics

Financial Implications of the Arbitration Case

By Pratima Desai

Impact on Access World Subsidiaries

LONDON, Feb 17 (Reuters) - An arbitration case filed in Hong Kong against the owners of global logistics company Access World could create financial risks for the group, which could ripple through international metals markets, accounts seen by Reuters show.

LME Warehouse Agreements

A statement in Access World's accounts filed last October said "a material uncertainty exists that may cast doubt on the ability of the group to continue as a going concern" linking it to a $14.8 million arbitration claim filed against parent Global Capital Merchants.

Previous Ownership and Financial Strain

Access World, which owns and leases warehouses to store metals including copper and ranks among major logistics players, did not say who filed the claim and why.

While it is impossible to determine how much metal in total is stored in its warehouses, Access World's stocks under London Metal Exchange warrant - a document conferring ownership - amounted exceeded 260,000 metric tons at the end of January, about 20% of LME total.

A lost arbitration case would make some Access World subsidiaries named as guarantors liable for the claim, and the squeeze could make them unable to pay rent on warehouses they lease, casting doubt over the fate of metals stored there.

LME says its warehouse agreements protect metals in LME-registered facilities.

"Nobody other than the warehouse company is permitted to retain LME metal held in an LME approved warehouse, and only then in the event of unpaid rent or charges by the metal owner," the exchange said in response to a request for comment.

According to five metals industry sources, such facilities can still be locked by their owners since their contracts are with warehousing firms who lease these facilities, not the LME.

While it is difficult to estimate a possible impact of such actions on metals liquidity and pricing, they said, Access World's former owner, Glencore, which sold the company in 2022, could be affected because it continued to use its storage facilities and was its biggest client.

"These cases are not related to Access World's business and are not expected to have a material impact for Glencore," the company said in response to a request for comment, referring to the arbitration claim.

Access World was forced to sell some warehouses it owned to pay rent on warehouses it leased in locations including New Orleans in 2024 and last year fell behind on rent payments to the Port of Johor in Malaysia, three people familiar with the matter said.

The Port of Johor did not respond to requests for comment.

(Reporting by Pratima Desai; editing by Veronica Brown and Tomasz Janowski)