Noble Group faces key Dec 20 deadline amid restructuring talks

 Lenders had agreed to waive certain rights under terms Noble Group committed to for its US$1.1 billion revolving credit facility until Dec 20.
Lenders had agreed to waive certain rights under terms Noble Group committed to for its US$1.1 billion revolving credit facility until Dec 20.PHOTO: REUTERS

HONG KONG (BLOOMBERG)- Noble Group Ltd, the embattled commodities trader, faces a key deadline on Wednesday (Dec 20) that could complicate its negotiations with creditors as it wrestles with a US$3.5-billion (S$4.7-billion) debt restructuring.

Lenders had agreed to waive certain rights under terms Noble Group committed to for its US$1.1 billion revolving credit facility until Dec 20. The company is talking to creditors about a restructuring that includes a debt-for-equity swap, according to people familiar with the negotiations. The big question is whether lenders will agree to extend the waiver.

As Noble Group fights for survival, global investors will be watching talks closely. Once Asia's largest commodity trader, Noble's decline since 2015 has been marked by losses, concern it won't pay its debt and allegations from long-time foe Iceberg Research that it inflated the value of some contracts.

"No waiver could mean an acceleration event and push the company into bankruptcy protection or liquidation," said Brayan Lai, an analyst at credit research firm Bondcritic, adding that the revolving credit facility holders are an important group as the company undertakes restructuring negotiations.

"I suspect they along with 2018 bondholders will be pushing for better restructuring terms versus the 2020/2022 bondholders who are further down the pecking order," he said.

Noble said last month that it has started discussions with various stakeholders with the objective of treating them all fairly.

Chairman Paul Brough said last week that he expects an extension of Noble's covenant waiver to be granted, and reiterated that Noble's priority is to stay out of insolvency. He warned there will be more pain ahead for the company.

An external media representative for Noble declined to comment further.

The Singapore-listed firm has been selling off assets to raise cash, and shareholders last week approved the sale of its oil unit to Vitol Group.

With restructuring talks having begun, the key issue is the kind of proposal the company would present, according to DBS Group Holdings.

"We believe that Noble could get an extension on the waiver pending restructuring talks or the talks could even proceed without this waiver if lenders feel they don't have much to gain by taking action," said Neel Gopalakrishnan, senior credit strategist at DBS.