Photographer: Nicky Loh/Bloomberg

Noble Group Strikes Restructure Deal With Lenders: Debtwire

Updated on
  • Agreement involves debt-to-equity swap and a new investor
  • Trader’s bonds extend rally to highest levels since May

Noble Group Ltd. has reached the outline of an agreement with its creditors to restructure about $3.5 billion in debt, paving the way for an investor to take a controlling stake in the company, Debtwire reported Thursday, citing sources it didn’t identify.

The agreement with bondholders and lenders was reached after meetings in London earlier this week, according to Debtwire. If implemented, the plan would give Noble access to working capital at a cheaper cost, and allow creditors to cash-in on shares obtained from a debt-to-equity swap via a sale to the strategic investor, it said.

A framework had been agreed between the parties, with some issues to be worked through, according to the report. An external spokeswoman for Noble Group said she couldn’t immediately comment on the Debtwire report.

Once Asia’s largest commodity trader and a challenger to the likes of Glencore Plc, Noble Group has been seeking to secure its immediate future after a three-year run marked by losses, a collapse in its shares and asset sales. The company has a bond coupon payment that falls due on Jan. 29, and a breakdown in negotiations could force it to seek protection from its creditors.

The trader’s 6.75 percent 2020 notes advanced 3.2 cents on the dollar to 48.1 cents as of 11:54 a.m. Hong Kong time, set for the biggest one-day gain since May 24, according to Bloomberg-compiled prices. Its 8.75 percent 2022 notes rose 0.7 cents to 47.4 cents. Both securities are at their highest levels since May last year. Its shares fell 3.8 percent in Singapore.

New Company

Under the agreement reported by Debtwire, Noble Group would set up a new company, in which employees would own stakes with the option to increase their share if performance targets are met.

Current equity holders, including founder Richard Elman -- who at one point turned a tiny trader into a $10 billion empire -- and China’s sovereign wealth fund, would have a smaller shareholding than employees, according to the report. Creditors would be given a controlling stake, before selling on to the strategic investor, and the company would resurface with about $600 million in debt.

Noble Group said this week it remains in talks with potential investors after a Chinese company, Cedar Holdings Group, was reported by Bloomberg to have made an approach to shareholders. Debtwire said Cedar is a candidate to enter the company and that talks with other strategic investors had been held.

— With assistance by Javier Blas, Jack Farchy, and David Yong

(Adds bond prices in fifth paragraph.)
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