Noble to introduce schemes of arrangement by Friday

After years of crisis, losses and defaulting, Noble Group has been putting in place the final elements of the rescue, which will see control handed to the senior creditors.
After years of crisis, losses and defaulting, Noble Group has been putting in place the final elements of the rescue, which will see control handed to the senior creditors.PHOTO: REUTERS

Noble Group plans to introduce the schemes of arrangement that underpin its restructuring this week, a key step in the creation of a new company that senior creditors signalled will hold to the highest standards of corporate governance after a drawn-out crisis.

The schemes, which buttress the US$3.5 billion (S$4.8 billion) debtfor- equity rescue, will be introduced in courts in London and Bermuda by Friday, the commodity trader said yesterday.

In a separate statement, the company's ad hoc group, or AHG, of senior creditors said they expected ''Old Noble'' to file for insolvency, while its successor entity revives the core business overseen by a tough new board.

After years of crisis, losses and defaulting, Noble Group has been putting in place the final elements of the rescue, which will see control handed to the senior creditors. Last month, Noble won shareholder backing for the plan, and it has said more than 85 per cent of senior creditors are in support.

The ad hoc group ''believes that the current management team, coupled with a new governance structure, is well positioned to execute on the proposed turnaround,'' Mr Joseph Swanson, senior managing director at Houlihan Lokey, a financial adviser to the creditors that are backing the rescue, said in a letter.

Candidates for the new board ''must be committed to international best practices and the highest levels of ethical comportment''.

Under Noble's revamp, 70 per cent of the equity in the new company will go to the senior creditors, 10 per cent to management and the rest to existing stockholders. The debt burden will be halved. After asset sales, Noble has shrunk back to its roots and is now focused on coal, liquefied natural gas and freight.

The ad hoc group said members had weighed the merits of winding down the business or selling the trader to a strategic investor, but both options were rejected in favour of keeping Noble together as a rejuvenated standalone business. In reaching that decision, the group checked out the claims against Noble Group, including suggestions its accounts were not rigorous enough.

As part of the review, ''the AHG and its financial advisers conducted a financial and business diligence exercise giving specific attention to matters raised by public critics'', Mr Swanson's letter said. ''The new board will conduct a comprehensive review of corporate accounting and risk-management policies as part of its commitment to best practice governance arrangements.''

Noble Group is in the process of finding a new chairman to replace incumbent Paul Brough, and has said the successful candidate will come from outside the company.

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A version of this article appeared in the print edition of The Straits Times on September 18, 2018, with the headline 'Noble to introduce schemes of arrangement by Friday'. Print Edition | Subscribe