The mainboard-listed Noble Group executive charged with restructuring the beleaguered commodity trader has no intention of getting embroiled in another bankruptcy.
After winning shareholder approval for the sale of its gas and power unit on Tuesday, chairman Paul Brough, who oversaw the liquidation of Lehman Brothers' assets in Asia, said Noble will likely find a buyer for its oil business by the end of the month and get an extension on a credit line beyond next month.
The firms would then have room to settle a repayment plan with its banks and avoid default, he said.
"I don't go into companies with the intention of liquidating them; I am a restructuring man," Mr Brough told a shareholders' meeting. "I have only once ever been in a Chapter 11 situation with Lehman Brothers, and I don't wish to go there again. So rest assured, I'm doing all I can to avoid any kind of formal process. I'm doing all I can to try and turn the business around."
Noble is fighting for survival more than two years into a crisis marked by criticisms of its accounting, a plunge in securities and credit rating downgrades. It is selling units to shore up its finances after posting a US$1.75 billion (S$2.36 billion) loss in the second quarter amid a surge in indebtedness.
Moody's Investors Service has warned the sales may be insufficient to cover its debt, while S&P Global Ratings sees a risk of default in the next six months.
Mercuria Energy Group bought the gas and power operation for US$261 million, according to a circular to shareholders. Selling the oil business and extending the credit facility, as well as a covenant waiver, would give Noble "a reasonably good platform now to sit down with our banks and talk about a repayment plan", Mr Brough said.
Once Asia's largest commodity trader, the company's market value has shrunk to just US$400 million from more than US$10 billion at the end of 2010. Noble's shares fell 2.4 per cent to close at 40.5 Singapore cents yesterday, taking losses this year to 76 per cent.
"Circumstances are very difficult indeed", including relationships with lenders, Mr Brough said on Tuesday. "The first three months of my chairmanship was to try and restore the confidence of our bankers. If we can do that, then we can get back to trading, business as usual," he said, adding that the firm will probably ask even more of shareholders in future than it has already.
Noble Group has US$2.6 billion in bank debt and bonds due in the next 12 months, Moody's estimated last month. The company has been trying to restore confidence among banks, counterparties and investors after securing a covenant waiver until Oct 20. A search for a "white-knight" investor continues.
Pressure is building on an International Swaps And Derivatives Association (ISDA) panel of investors and bankers to end Noble Group's credit-default swap impasse.
ISDA's determinations committee will reconsider whether Noble triggered a credit event - the precondition for a payout on credit-default swap contracts - when it arranged a 120-day extension to a loan facility in June.