Noble's creditors say new business to focus on limited market segments, get ethical directors

The restructuring proposal will transfer Noble's business to a new entity that will be controlled by the old Noble's creditors and management. PHOTO: REUTERS

SINGAPORE - A key group of Noble Group's senior creditors said that they will focus the post-restructuring company on a limited number of market segments, and that they are assembling a board of directors committed to "the highest levels of ethical comportment".

The open letter from the creditors, who call themselves the Ad Hoc Group (AHG), came as Noble prepares to begin parallel schemes of arrangement in England and Bermuda to implement its restructuring. The restructuring proposal will transfer Noble's business to a new entity that will be controlled by the old Noble's creditors and management. The commodity trading company said that it plans to launch the schemes by Sept 21, 2018.

In the letter, the AHG said that, after restructuring, the plan is for Noble to focus on energy coal, met coke, carbon steel materials, liquefied natural gas and aluminium, where the company has historically been the most profitable and within the historical competency of the management team.

"It is intended that additional growth initiatives will be tightly controlled by the new board with an eye to balancing the need for seeding future growth, with a focus on a return to profitability in the near-term, which is required to service interest under the business plan," the creditors said.

The AHG also said that "good progress" has been made on finalising a core group of independent non-executive directors, with announcement to come once arrangements have been finalised.

"Candidates for the new board must be committed to international best practices and the highest levels of ethical comportment...The new directors are being selected not only based on their exceptional competence, but also on their interest in and commitment to working with the company's senior executive team who will lead the planned recovery and ramp-up in volumes over the coming months," the creditors said.

Seeking to address concerns about Noble's accounting practices, which have come under criticism for being too aggressive, the creditors said that new board is expected to take a "conservative approach" to non-cash accruals specifically and accounting matters generally.

The AHG added that the restructuring plan's requirement for US$800 million of new capital and reinvestment of US$250 million of company cash balances in the trading business shuold be seen as "a strong statement of support regarding the future potential of the business".

Separately, Noble said that it expects to complete the disposal of vessels "Ocean Ambition" and "Ocean Forte" by no later than Sept 30, 2018. Upon the completion, the group will have completed the disposal of its Panacore vessels, allowing the retirement of about US$63 million of debt to leave net proceeds of approximately US$32 million.

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