us-sanctions 21 May 2020

Sweden’s Nynas has OFAC sanctions lifted after Venezuela divestment

The US Treasury Department’s Office of Foreign Assets Control (‘OFAC’) has announced it has lifted sanctions against Nynas, a Swedish manufacturer of base oils and bitumen, after a company  reorganization led to Venezuela’s state-owned oil company (‘PDVSA’) reducing its majority stake in the firm.

‘Nynas AB has undertaken a corporate restructuring that has resulted in Nynas AB no longer being blocked pursuant to the Venezuela Sanctions Regulations,’ OFAC said. ‘This corporate restructuring, among other things, severs control by blocked persons and reduces the interest of blocked persons below 50 percent…U.S. persons do not require authorization from OFAC to engage in transactions or activities with Nynas AB, provided such activities do not involve blocked persons or otherwise prohibited activities.’

Nynas President Bo Askvik said: ‘This means an end to many years of having to carry the unfair burden for a Swedish company of being subject to US sanctions. This led to an increasingly deteriorating financial situation, which ultimately forced Nynas into reorganization at the end of last year. Our focus now is to successfully end the ongoing reorganisation process and having exited sanctions Nynas will be able to return to normal trading conditions and secure long-term financing.’

Nynas was hit hard by US sanctions on PDVSA, which resulted in problems importing Venezuelan oil and financial restrictions that meant it could not extend loans with banks, leaving it unable to pay its debts. Nynas, which is part-owned by Finland’s Neste, began a court-administered process last year to reduce ownership by PDVSA.

The company explained that, under the terms of the restructuring of its shareholders and board of directors, which was reviewed and approved by OFAC, PDVSA has reduced the percentage of its Nynas shares to 15% of all shares currently issued.

‘The 35 percent divested by PDVSA are now controlled by an independent Swedish foundation under no influence by PDVSA, established to enable a reduction in PDVSA’s ownership interest. The Nynas board of directors will have in total nine directors, including one director representing PDVSA, two employee representatives and an independent chairman,’ the company said.

Nynas has agreed to an ongoing reporting requirement with OFAC regarding any future changes to its shareholders and board of directors, as long as PDVSA remains a specially designated national (‘SDN’).