Noble said to lose key bank support as DBS cuts lending

Noble Group lost support from one of its key banks as Singapore's DBS Group Holdings cut lending, according to a person with knowledge of the matter.

The commodity trader, which is fighting for its survival, suffered another blow with news that Mr Jeffrey Frase has resigned as co-chief executive officer and global head of oil liquids. He resigned to pursue other opportunities outside the group, Noble said in a statement yesterday, without giving details.

Co-CEO William Randall will assume sole role of chief executive, the company added.

Noble shares sank.

DBS sold its US$60 million (S$82 billion) stake in Noble's US$1.1 billion revolving credit facility (RCF) due next May, and also closed some other financing to the company, the person said, asking not to be named.

It is unclear if the bank has remaining credit exposure to the trader.

The withdrawal by a core bank is the latest blow to Noble as it moves towards an all-but-inevitable debt restructuring, battered by losses of over US$3 billion so far this year. Noble and DBS declined to comment.

The move by DBS to cut its exposure to Noble was first reported by Debtwire. DBS had been a key supporter of Noble through a crisis at the Hong Kong-based trader that has run for more than two years.

Noble chairman Paul Brough recently mentioned DBS together with Societe Generale and ING Groep for having helped support the company through a crisis of confidence following its announcement of a surprise first-quarter trading loss. On an August earnings call, he highlighted "the great support we received from my bilateral banks, SocGen, ING and DBS" as having been key to securing trade finance to support Noble's Asian business - the part of the company that remains after the sale of its US-focused oil unit to Vitol Group. The bank was a member of a steering committee of lenders under the RCF formed earlier this year.

Noble, listed in Singapore, fell as much as 16 per cent to 21 Singapore cents, the lowest since 1999, and ended at 22 cents. The company, once worth almost US$12 billion, has seen its market capitalisation plummet to just US$212 million amid criticism of its accounting practices led by Iceberg Research.

Noble has experienced a huge squeeze in financing availability - a key resource for trading houses whose core business is to buy and sell commodities using credit. It said on Thursday that liquidity headroom - a measure of capital available to fund its business - fell 43 per cent over the third quarter, while available cash at operations shrank to the lowest in over a decade.

On top of the RCF line, and a borrowing base loan that it is planning to close after the sale of its oil business, Noble has outstanding bonds maturing next year, 2020 and 2022 plus a perpetual note.

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A version of this article appeared in the print edition of The Straits Times on November 14, 2017, with the headline 'Noble said to lose key bank support as DBS cuts lending'. Print Edition | Subscribe