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Chinese Conglomerate Interested in Buying Noble Group

Updated on
  • Trader says talks with strategic parties, creditors continue
  • Noble looks for restructuring deal as coupon payment looms

Noble Group Ltd. said it remains in talks with “potential strategic parties” after people familiar with the matter said a Chinese conglomerate had made an approach to shareholders amid attempts to restructure the troubled commodity trader’s $3.5 billion in debt.

Cedar Holdings Group, the largest private company in Guangzhou province, has expressed interest in buying control of Noble Group, the people said, without giving any details of the approach and asking not to be identified because the information is confidential. 

Noble Group, battered by trading losses, writedowns and controversial accounting, is racing to hammer out a deal on restructuring $3.5 billion in debt before a coupon payment falls due on Jan. 29, people familiar with the matter said earlier this month. Any buyer or equity investor would likely want to wait for the outcome of the restructuring, almost certain to include a dilution of existing equity.

Nonetheless, Noble Group’s shares soared as much as 37 percent on Monday, prompting a query from Singapore Exchange Ltd., where its stock is listed.

A representative for Cedar Holdings declined to comment. In its response to the exchange, Noble said it “has previously announced it is in talks, which continue, with various potential strategic parties and its creditors,” and that the discussions “are open and constructive, and are moving forward.” The company said it isn’t aware of any other possible explanation for the move in its shares besides the story about Cedar’s interest.

Previous discussion with possible strategic investors including China’s Sinochem haven’t yielded any deal.

Cedar is the largest private company in Guangzhou and ranks 16th nationwide, with 157 billion yuan ($24.5 billion) in 2016 sales, according to its website. Founded in 1997, its businesses include commodities trading, chemicals, tourism, real estate and finance. The firm controls two listed companies: Zibo Qixiang Tengda Chemical Co. and Sinoer Men’s Wear Co.

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Noble’s market value has sunk from more than $10 billion in 2010 to less than $300 million. Its stock ended 32 percent higher at 27 Singapore cents.Noble’s 3.625 percent notes due March 20 jumped 3.5 cents on the dollar to 50.9 cents as of 5:13 p.m., the biggest gain since May, according to Bloomberg-compiled prices.

The restructuring talks, which started in November, are coalescing around a deal that would involve converting much of Noble Group’s unsecured debt into equity. The agreement could result in the dilution of the stakes of current equity holders, including founder Richard Elman, who has an 18 percent interest, and China’s sovereign wealth fund with 9.5 percent.

Noble must pay $39.7 million of interest due on Jan. 29 on its bonds maturing 2020, according to Bloomberg calculations. It’s unclear whether the company would pay the coupon while in talks, but if it fails to pay it would be declared in default after a brief grace period. It also has bonds due in 2018 and 2022.

The company said this month it closed the sale of its Noble Americas Corp. unit to Vitol SA at a lower price than estimated. The disposal was completed for $400 million, which includes proceeds from an earlier disposal of its gas and power unit, compared with the illustrative figure of $575 million.

— With assistance by Dingmin Zhang, Alfred Cang, Jasmine Ng, Vinicy Chan, and David Yong

(Adds line from Noble statement in fourth paragraph.)
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