Noble shares up on talk of rescue plan

Embattled commodities trader Noble has been locked in talks with creditors to resolve its US$3.5 billion (S$4.6 billion) debt headache. The firm has said the discussions are to manage the maturity of its borrowings to optimise the use of available ca
Embattled commodities trader Noble has been locked in talks with creditors to resolve its US$3.5 billion (S$4.6 billion) debt headache. The firm has said the discussions are to manage the maturity of its borrowings to optimise the use of available cash.PHOTO: BLOOMBERG

Chinese firm Cedar reportedly interested in buying control

Noble stock shot up yesterday on a report that the embattled commodities trader's hopes to sell an interest in the group as part of a rescue plan may not be a long shot after all.

A Bloomberg news report that Chinese conglomerate Cedar Holdings has expressed interest in buying control of Noble drove the shares to a high of 28 cents by midday - up 7.5 cents or 37 per cent.

The rush tapered off a tad with the counter finishing the day at 27 cents, a gain of 6.5 cents or nearly 32 per cent. About 35 million shares changed hands, making it the day's sixth most active counter.

Noble is up 35 per cent this year.

The renewed interest yesterday prompted a trading activity query from the Singapore Exchange.

Noble echoed its previous remarks in response: That it was in talks, "which continue", with various potential strategic parties and creditors. These talks are "open and constructive" and "moving forward" but there is no assurance on their possible outcome, it added.

Cedar, which is based in Guangzhou, is reported to have made an informal approach to some major Noble investors. No formal talks have begun, said Bloomberg, quoting anonymous sources.

Cedar recorded sales of 157 billion yuan (S$32.4 billion) in 2016, according to its website. Its operations include supply chain, chemicals, tourism, real estate and finance. It controls two listed firms.

Noble has been locked in talks with creditors to resolve its US$3.5 billion (S$4.6 billion) debt headache. It has said the talks are to manage the maturity of borrowings to optimise use of available cash.

Analysts generally believe that a strategic investor may be hard to pin down at this juncture until Noble gets its house in order.

It is believed the talks with creditors revolve mostly around swopping debt for equity as well as terming out the rest for a "long period" by issuing new debt for old and borrowing against assets.

Under a strategic review led by chairman Paul Brough, Noble has sold a string of assets. A week ago, it announced the completion of the sale of Noble Americas Corp (NAC) to Vitol US Holding for an estimated net proceeds of US$400 million. As its global oil liquids business was primarily conducted through NAC, the deal's close also marked the conclusion of its monetisation of the oil liquids business. Noble has also sold its North American Gas & Power businesses.

There are other pressing issues. Noble needs to cough up US$39.7 million of interest due on Jan 29 on its bonds maturing 2020 or face the risk of default, Bloomberg reported. This could be dicey as it also has bonds due in 2018 and 2022.

A version of this article appeared in the print edition of The Straits Times on January 23, 2018, with the headline 'Noble shares up on talk of rescue plan'. Print Edition | Subscribe