Noble says talks with creditors, investors 'constructive'

Firm's shares spike on talk that it may be close to sealing debt restructuring plan

Noble is said to have reached the framework of an agreement to restructure their debts.
Noble is said to have reached the framework of an agreement to restructure their debts. PHOTO: REUTERS

Noble Group shares spiked yesterday on speculation that the embattled commodity trader may be close to sealing its debt restructuring plan, paving the way for a new investor to enter.

Its chairman, Mr Paul Brough, however, declined to comment beyond saying that the talks with its creditors and strategic investors have been "constructive".

Investor advocacy group Securities Investors Association (Singapore) (Sias), noting that the market talk has led to wild swings in Noble's share price, called on the firm to be "more definitive" in its communication.

Noble halted trading in its shares in the afternoon, but not before the stock jumped to as high as 32 Singapore cents from its opening price of 26.5 Singapore cents. It last traded at 30.5 Singapore cents.

The group said in an exchange filing last night that it continues to be in talks with potential investors, and has not concluded any agreement for debt restructuring or with strategic investors.

Earlier in the day, Mr Brough told shareholders at a special general meeting (SGM) he was hopeful the group will conclude its debt restructuring talks soon. But he declined to say more as it may be detrimental to Noble's best interest.

Noble is said to have reached the framework of an agreement to restructure its US$3.5 billion (S$4.6 billion) worth of debts, Debtwire reported yesterday, though some issues still need to be worked through. The agreement with bondholders and revolving credit facility (RCF) lenders was struck after meetings in London on Monday and Tuesday, said Debtwire. Under the deal, RCF lenders and noteholders will be given a controlling stake after converting their debt for equity, leaving the new entity with about US$600 million in debt. While Chinese firm Cedar Holdings is a candidate to enter the company, talks with other strategic investors have also been held, Debtwire added.

The entry of a strategic investor, however, would take place after the debt restructuring is implemented. It would entail creditors selling to the investor a large part of the shares of the new company which they obtained through the debt-to-equity deal.

At the SGM, shareholders approved the sale of four wholly-owned Kamsarmax dry bulk carrier vessels, which are expected to bring in total proceeds of US$95 million. After repaying bank loans for the vessels and other costs, the group will record net proceeds of about US$30 million.

Some 99.97 per cent of the shares represented at the meeting voted for the resolution. With that, Noble has completed its asset disposal programme, one of three sources of funds to repay its debts, said Mr Brough.

A second source would be the monetisation of other good assets, whether through a sale or borrowing against them. The third is the firm's remaining operations, which should be cashflow positive, allowing the group to raise debt against them, he added.

In an unexpected development, Sias asked Noble if it has enough cash to repay its coupon repayment due on Jan 29, and if it is getting the best price for the assets it is selling off given that the selling prices are below book value. In view of the wild swing in prices, "the Singapore Exchange has queried Noble", Sias president and chief executive David Gerald said in a statement. "Can Noble be more definitive in its communication?"

Sias said Noble has agreed to address these concerns and meet shareholders in a dialogue in due course.

A version of this article appeared in the print edition of The Straits Times on January 26, 2018, with the headline 'Noble says talks with creditors, investors 'constructive''. Print Edition | Subscribe