Noble Group has agreed to stand down as a note holder of debt-ridden Australia-listed miner Sundance Resources, it announced yesterday.
The convertible notes, which are held by a wholly owned Noble subsidiary, had a face value of A$32 million (S$31.7 million). They have been fully impaired and will be cancelled by Sundance under an agreement reached on Monday with the Australian miner's other note holders.
Noble Resources International will instead get a package valued at A$27.6 million, or S$27.3 million, for the cancellation of the notes. This is made up of A$11.9 million in cash, 475.8 million new Sundance shares and 2.38 billion options that could represent a further stake of up to 9.7 per cent if exercised.
Sundance plans to fund the debt swop with proceeds from a share placement to Australia-listed Aust-Sino Resources Group.
Noble, a Singapore-listed commodity trader, said the transaction does not affect its own planned debt restructuring as the consideration would be among the assets to be sold and transferred to the new corporate entity in that restructuring.
It added that the cash proceeds from the transaction "will be used for general corporate purposes".
Noble said in its filing that the rationale for the transaction was because it "satisfies the relevant notes owed to (Noble Resources International) by Sundance, as well as to allow the company to further consolidate its shareholding interests in Sundance".
"The note holders are also supportive of the need to restructure the balance sheet of Sundance in order to attract new investments to fund Sundance's iron ore project," it added.
Noble Resources International first subscribed for Sundance notes in 2013. It also has arrangements for the right to at least half of all iron products from Sundance's Central African Mbalam-Naeba iron ore project in the first 10 years of production - a deal that Noble said will "continue unaffected".