Noble hit by second lawsuit in a week

Noble Group, which is based in Hong Kong, said yesterday that while it is aware of the case, it has not yet been served any writ, and plans to contest the claims. The company was once Asia's largest commodity trader.
Noble Group, which is based in Hong Kong, said yesterday that while it is aware of the case, it has not yet been served any writ, and plans to contest the claims. The company was once Asia's largest commodity trader.PHOTO: BLOOMBERG

Indonesian coal miner sues for $342m in fresh blow to firm after Goldilocks lawsuit

JAKARTA • Singapore-listed Noble Group's week of woe just got a lot worse as the trader, which has defaulted and seen founder Richard Elman quit the board, was sued by an Indonesian coal miner for more than US$260 million (S$342 million) in a case that may jeopardise some of its remaining business.

In addition to the sum sought, PT Atlas Resources is seeking to cancel marketing deals with Noble and one of its units made in 2013, as well as unwind equity transactions between the two groups, according to a summary of the lawsuit filed in a Central Jakarta court this week.

Yesterday, the Hong Kong-based trader said that while it is aware of the case, it has not yet been served any writ, and plans to contest the claims.

"The company is not aware of the grounds for the claim or any further details relating to the same. Nonetheless, the company intends to vigorously defend any claim if served."

After a three-year crisis, the fate of the company that was once Asia's largest commodity trader hangs in the balance as chairman Paul Brough battles to push through a restructuring that aims to hand control to creditors. After racking up billions of dollars in losses, the viability of the revamped business - should that win approval - will turn on its ability to generate profits from remaining operations to service a reduced debt load.

On Thursday, Noble Group said it was possible, though unlikely, that bond holders could force it into liquidation after it failed to pay its 2018 bonds at maturity and coupon payments, although it argued that any attempt by creditors to wind it up would likely fail.

That followed a blow on Tuesday when major shareholder Goldilocks Investment sued the firm. Mr Elman's resignation as non-executive director was announced mid-week.

MORE COMPLICATIONS

The initiation of legal actions against Noble this week further complicates Noble's restructuring. For bond holders, the key is still whether the company would be able to turn around its core businesses, which would ultimately determine how much they recover.

MR NEEL GOPALAKRISHNAN, senior credit strategist at DBS Group Holdings.

The default may have significant consequences for Noble if it prompts trading counter-parties to walk away from contracts. Before the default, Mr Brough had told investors it was "important from a customer and supplier perspective that we are seen to be compliant with our borrowing obligations".

Noble's shrink-to-survive strategy has seen it sell off a slew of businesses worldwide, scaling back to its Asian roots with a rump business that is focused on coal trading.

PT Atlas' 2016 annual report said it has a longstanding agreement with Noble. Its lawsuit, which was registered on March 19, is against Noble, chief executive officer William Randall and Noble Resources International.

As Noble's crisis has escalated, the company's market value in Singapore has plummeted to less than US$93 million, with some major shareholders trimming stakes this week, including Prudential.

Under Mr Brough's debt-for-equity restructuring plan, it is proposed that senior creditors will take the largest stake in a new company, diluting existing holders.

"The initiation of legal actions against Noble this week further complicates Noble's restructuring," said senior credit strategist Neel Gopalakrishnan at DBS Group Holdings. "For bond holders, the key is still whether the company would be able to turn around its core businesses, which would ultimately determine how much they recover."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on March 24, 2018, with the headline 'Noble hit by second lawsuit in a week'. Print Edition | Subscribe