Noble Group yesterday announced a huge full-year loss while its auditor flagged concerns over the firm's ability to continue as a going concern.
The group recorded a loss of US$4.9 billion (S$6.5 billion) for the 12 months to Dec 31, compared with net profit of US$8.7 million in 2016.
Revenue tumbled 26 per cent to US$6.4 billion as traded volumes dropped due to constraints in trade finance and liquidity.
Auditor EY said Noble's current liabilities of US$1.19 billion of bank debt and US$378.8 million of senior notes due this month as well as its net deficiency of US$800.9 million, "indicate the existence of a material uncertainty which may cast significant doubt over the group's ability to continue as a going concern".
But Noble's board said it is satisfied the group can continue as a going concern until the restructuring is completed.
Progress in talks with some creditors has been "quite good", said chairman Paul Brough, adding: "We hope to come to some conclusion with the ad hoc group in the course of the next few days or weeks."
Noble will call a shareholders' meeting after the final terms are nailed down, he said.
AT A GLANCE
REVENUE: US$6.43 billion (-26%)
NET LOSS: US$4.94 billion (2016 profit US$8.7 million)
Mr Brough added that Noble's restructuring plan - described by its advisers as the most complex to have been undertaken in Asia - has faced both support and opposition.
A group of its perpetual bond holders, holding more than 25 per cent of the securities, has hired lawyers to negotiate a better deal or "exercise remedies" against the firm, said a group representative in an e-mailed statement yesterday.
Noble declined to comment on whether it will be making payment on its coupon and bonds due this month, saying the results briefing was not the appropriate forum.
"We will do that through the SGX at the appropriate time," said chief financial officer Paul Jackaman.
The group made the coupon payment due on Jan 29 in order to protect its trading franchise, as "it is important from our customer and supplier perspective that we are compliant with our borrowing obligations", he added.
But Mr Jackaman declined to reveal whether its long-term contracts have any credit event clause, saying these are trade secrets.
Noble's 2017 deficit includes a US$1.053 billion loss from discontinued operations and US$3.24 billion of exceptional items recorded from its continuing operations.
These comprise US$2.15 billion in adjustments to net fair value gains on commodity contracts and derivative financial instruments and US$1.04 billion in impairments on some current and non-current assets, as well as a non-cash loss resulting from a significant dilution of its shareholding in Yancoal Australia.
Still, volumes in the coal business remained "fairly stable", with a 7 per cent decline from 2016, as it was able to increase its marketing volumes, which do not require trade finance support, said Noble.
Volumes in the metals, minerals and ores division declined due to a significant long-term iron ore contract ending at the end of 2016, and a focus on profitability over volumes in its freight business.
Noble shares closed down 0.5 cent at 17.2 cents before the results announcement.