Noble to include Noble Petro stake in sale of US oil liquids unit to Vitol

Noble Group will include equity interest in Noble Petro in its proposed sale of wholly owned subsidiary Noble Americas Corp (NAC) to rival Vitol US Holding, rather than sell this stake to a third party.

The debt-laden commodities trader said yesterday the inclusion of Noble Petro and certain other adjustments would increase the base consideration in the sale of NAC by US$15 million (S$20.4 million) to US$217 million from around US$202 million as at July 1 this year.

The gross consideration from the NAC sale would amount to about US$1.43 billion, comprising the new base consideration of US$217 million and the net working capital of some US$1.22 billion as at June 30 this year.

This would result in cash proceeds of about US$597 million, after deducting debt of around US$836 million, said Noble in a pre-market filing.

The commodities trader had originally agreed to sell NAC to Vitol, the world's largest oil trader, and its parent Euromin for about US$1.42 billion. But the final consideration was to be based on a number of variables, including the value of NAC's interests in Noble Petro and NAC's contracts.

Noble Petro distributes petrol and diesel in Texas and along the United States Gulf Coast.

Noble put NAC up for sale in July as part of a strategy to sell assets and pay down debt after posting a second-quarter loss of US$1.8 billion. It earlier sold its North American gas and power businesses for US$248 million. The group will hold a special general meeting to seek shareholder approval for the proposed disposal of NAC.

Separately, Moody's Investors Service said Noble's weak financial third-quarter results will have no immediate impact on its Caa3 corporate family rating or negative rating outlook.

The company reported a net loss of US$1.2 billion for the quarter, mainly due to write-downs for net fair value gains and the loss related to the sales of its businesses.

Its cash and short-term deposits, excluding cash balances with future brokers, fell to US$256 million at end-September from US$467 million at end-June this year.

This is insufficient to cover the company's US$1.6 billion in bank debt and bonds due in the next 12 months, Moody's said yesterday.

Noble's cash flow from operations turned to positive US$236 million from negative US$546 million in the previous quarter, mainly because of a decrease in working capital deficits. However, Moody's said it expects the company to have difficulty in generating positive cash flow, given its weak underlying profitability. It also said it is highly uncertain whether Noble's sales of assets will raise sufficient proceeds to meet its debt maturities and cash outflow over the next 12 months.

Bloomberg reported DBS Group sold its US$60 million stake in Noble's US$1.1 billion revolving credit facility due in May next year, and closed other financing to the firm.

A version of this article appeared in the print edition of The Straits Times on November 15, 2017, with the headline 'Noble to include Noble Petro stake in sale of US oil liquids unit to Vitol'. Subscribe