SINGAPORE (BLOOMBERG) - Noble Group's stock sell-off deepened on Friday (Nov 24) as the trader pressed on with an effort to restructure its debt burden amid concerns it will default and, separately, transferred a block of shares to employees who are leaving the company as it disposes of North American energy assets.
The shares sank as much as 9.2 per cent to 16.8 Singapore cents, the lowest since 1999, and traded at 16.9 cents at 2:11 p.m. The stock has lost 18 per cent since Friday's close, dropping for a seventh week. The market capitalization, which once topped US$10 billion, has collapsed to just US$167 million.
Noble Group, which held talks with creditors this week in a bid to agree the restructuring of US$3.5 billion in bonds and loans, has been offloading assets to raise funds amid a liquidity squeeze. Among units sold off were the gas-and-power unit, which was bought by Mercuria Energy Group Ltd, and in a deal that's yet to close, its prized oil-liquids business to Vitol Group. The protracted stock rout has eviscerated the value of remaining equity holders, including founder Richard Elman, as well as China's sovereign wealth fund.
"The stock price speaks for itself - the market clearly sees little prospect of the group surviving in a form that will realize any value for existing shareholders," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "Once a stock reaches these depths, relatively small moves can be amplified in terms of their percentage of the remaining value."
After the close on Thursday, Hong Kong-based Noble Group said it was transferring a total of 14,688,625 treasury shares to the staff from the two units, according to a statement. The stock, handed over in relation to awards a 2014 restricted share plan, was valued at US$2.01 million.
Noble Group has asked its main creditors to agree on a unified response to this week's opening restructuring proposal, according to a person familiar with the matter. The company held talks with creditors holding stakes in a revolving credit facility, and three bonds due in 2018, 2020 and 2022, the person said, asking not to be named because the meetings are private.
Noble Group's bonds due in March have gained in the past two days, bringing this week's advance to 1.6 cents to reach 46.8 cents on the dollar, the highest level in two weeks, according to Bloomberg-compiled prices. The notes due in 2020 have risen about 1 cent this week to 40.8 cents.
Still, as Noble Group's troubles deepened earlier this month, Fitch Ratings said a default "appears probable," cutting the credit rating deeper into junk territory.
"It is unclear how Noble will address these maturities without a change to its capital structure," Fitch said, referring to the bond repayment due in March, revolving credit facility in May and further bond deadlines.