Noble Group Halts Shares as Restructuring Deal Hangs in Balance

(Bloomberg) -- Noble Group Ltd. suspended its shares in Singapore on Monday pending an announcement, as efforts to get shareholder agreement on its controversial $3.5 billion debt restructuring plan drag on longer than expected.

The stock fell to a record low of 5 Singapore cents last week before closing at 5.4 cents on Thursday prior to a public holiday. Once Asia’s largest commodity trader, the company has seen its market value shrink to about $50 million from more than $10 billion in 2010.

After three years of decline featuring billions of dollars in losses, a debt default, law suits and, more recently, public sparring with shareholder Goldilocks Investment Co., the trader is struggling to secure a rescue deal that will swap half the debt for equity and hand control to creditors. The company’s original plan was to complete the restructuring by mid-to-late July.

Meanwhile, Pinpoint Asset Management Ltd. and Value Partners Ltd. have filed a claim against Noble Group in a U.K. court, according to a search of cases. While there were no details on what the claim involves, Pinpoint is part of a group of perpetual bondholders, which have objected to the restructuring plan. Noble Group was said in May to be close to an agreement with the group.

Under the terms of a revised restructuring deal in March, the perpetual bondholders would have been offered an exchange of their existing securities with a face value of $400 million for $25 million of new perpetual bonds. Noble Group’s initial plan in January had offered the perpetuals $15 million.

‘Too Speculative’

The perpetual bonds were down 2.3 cents to 7.3 cents on the dollar by 5:14 p.m. in Singapore on Monday, and set for the biggest one-day decline since January. The trader’s defaulted 2018 notes climbed 0.4 cent to 39.6 cents on the dollar, recouping part of the 2.7 cent drop on Friday.

“Looking at the market reaction on the perps, there might have been disruptions to the discussions between Noble and its perpetual bondholders,” said Ang Chung Yuh, senior fixed-income analyst at iFast Corp. “Until the parties explain the situation, it is too speculative to trade this credit.”

While the restructuring plan has been backed by some 85 percent of senior creditors, as well as founder and largest shareholder Richard Elman, it’s run into fierce opposition from Goldilocks. The Abu Dhabi-based investment fund has sued the trader, as well as the banks and hedge funds supporting the proposal, to halt the deal.

Independent Adviser

To get the rescue over the line, Chairman Paul Brough needs approvals from shareholders as well as creditors. The company is working on a circular to send to stock holders, before a special general meeting yet to be scheduled.

Brough has said that if shareholders don’t approve the plan, the company would opt for a pre-packaged administration in the U.K. to implement the restructuring. An external representative for Noble Group couldn’t be immediately reached for comment on Monday.

The trader has hired Provenance Capital Pte as an independent adviser to assess whether the proposed restructuring is fair, complying with a request from the Singapore regulator after the deal ran into opposition. Provenance’s view needs to be included in the circular on the deal that’s sent to holders.

Brough told analysts during the first quarter earnings call that he would be “quite happy” if the company could issue the circular by the end of May.

The company’s trading operations have been racking up losses as the restructuring talks continue. It lost $71.5 million in the three months through March as revenue sank almost 40 percent from a year earlier to $1.2 billion. That follows a full-year shortfall of almost $5 billion in 2017.

©2018 Bloomberg L.P.

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