SINGAPORE - Noble Group on Wednesday (June 20) said it has won support from its shareholder Goldilocks for its financial restructuring, with the commodities firm electing to raise the amount of equity that shareholders would hold in the newly restructured firm to 20 per cent from 15 per cent proposed previously.
Shares of Noble jumped on Wednesday morning as a trading halt was lifted, jumping 2.5 cents or 46 per cent to 7.9 cents at 9.33am. Around 1:05 pm, the stock was up 48 per cent at eight cents.
The remaining equity in New Noble, the slimmed down entity that will result from the restructuring, will be 70 per cent held by the senior creditor special purpose vehicle (SPV), and 10 per cent by the management SPV.
Goldilocks shall also be entitled to nominate one person to be appointed to the board of directors of the restructured firm. Goldilocks said it has nominated its director and fund manager, Ajit Joshi, to be its first representative on the Noble board.
Noble and Goldilocks' parent Abu Dhabi Financial Group (ADFG) plan to work together as well to expand the group's presence in the Middle East. ADFG has assets under management of more than U$6 billion and offices across the Middle East, the UK, and Eastern Europe.
In the light of this collaboration, Noble's subsidiary Noble Resources International has entered into a strategic partnership agreement with ADCM Resources. ADCM Resources will, among other things, work with the group on business development activities in the Middle East region, providing access to its customer base and relationships to strengthen the group's client base.
The strategic partnership will be for an initial term of four years and may be extended by mutual agreement for an additional four years. ADCM Resources shall be entitled to a fee of US$3.5 million in respect of the initial four-year term, as well as an annual payment of 5 per cent of the net profits derived from sales generated as a result of the services provided by ADCM Resources from any new business, among other things.
The partners will set up within 90 days a new 50-50 joint venture (JV) entity to source new supply contracts with a term of two years or more. Once the restructuring takes effect, Noble will be bound to contribute US$4 million in funding to the JV. ADCM Resources shall also be entitled to receive the first US$3 million in net profits from the JV, following which net profits shall be shared equally by the parties.
If the JV does not hit net profit of US$3 million within two years, ADCM Resources may choose to end the JV.
"The company believes the strategic partnership agreement will be a constructive and cost effective way to expand the group's business activities in the Middle East. The Middle East is an attractive market for Noble: the region's economies are reducing their oil dependency and businesses are seeking to diversify their interests and investments internationally," Noble said.
Goldilocks has provided the company with an irrevocable undertaking to support the restructuring on the revised terms. Goldilocks holds about 8.1 per cent of the company's issued shares.
Its support also means that both parties have reached a settlement to halt mutual claims and proceedings. Noble has agreed to pay Goldilocks up to US$5 million as a reimbursement of documented legal costs and expenses incurred by Goldilocks in connection with these legal claims. The settlement agreement bears no admission of liability or wrongdoing of either party.
In a press statement, Goldilocks' Mr Joshi said the restructuring now "endeavours to create a sustainable balance between the interests of the shareholders and the future of Noble", adding that Goldilocks has taken a "constructivism approach" in engaging Noble.
"We will collaborate with Noble and lend our support to open new doors; we will join hands in creating new opportunities in the Middle East, Goldilocks' home market," said Mr Joshi.
Paul Brough, chairman of Noble said: "We are pleased to have secured Goldilocks' support for the restructuring. The strategic partnership agreement announced today will create real opportunities for New Noble in the Middle East."
He added that the restructuring support agreement "represents the best and most fair deal for all parties, and is the only way to preserve value in the group".
In a separate filing on Wednesday, Noble said certain perpetual securities holders have dropped a legal claim against the group. Pinpoint Asset Management and Value Partners, who are holders of existing 6 per cent perpetual securities issued by the company, had filed a lawsuit on June 13, 2018 in the High Court of Justice of England and Wales to seek out an injunction restraining the transfer of assets.
Noble said it received on Tuesday a copy of a notice of discontinuance of the claim by both debt holders.