Noble Group Says Rescue Is Done as Singapore Probe Drags On

(Bloomberg) -- Noble Group Ltd. finally completed its mammoth debt-for-equity restructuring, handing control of its assets to creditors as Singapore regulators continue to probe the commodity trader and its officers for possible breaches of the law.

After its preferred rescue plan was blocked by Singapore’s refusal to let it relist in the city-state, Noble pursued its Plan-B in Bermuda, where a court appointed an officer to carry out a kind of insolvency process. Under the plan, so-called New Noble Group assumes all of the company’s assets, new bonds have been issued and $800 million in new financing has been made available.

The revamp is the culmination of Chairman Paul Brough’s epic battle to rescue the beleaguered company after years of crisis that brought it to the brink of bankruptcy. The focus now shifts to whether management can turn New Noble around while its core business and some key personnel face the scrutiny of Singapore’s regulators.

Noble Group Says Rescue Is Done as Singapore Probe Drags On

“The challenges next from here is on the regulatory front, who knows what will happen there, and nobody knows how long it will take,” said Brayan Lai, an analyst at credit research firm Bondcritic Ltd. “The restructuring puts them in a better shape going forward to get their business back in order. That’s the challenge.”

The company said the probe by Singapore has prompted it to reconsider “the most appropriate composition” of New Noble’s board of directors, and this process will take “some further time to complete.” Brough will be the new entity’s first chairman while a successor is found. Before the probe, he said he will leave once the revamp is completed.

Independent non-executive directors Wayne Porritt and Tim Isaacs, who were brought on to help guide the restructuring through to completion, have resigned.

Noble’s two most senior executives remain in the spotlight. Chief Executive Officer Will Randall and Chief Financial Officer Paul Jackaman were both directors of the Noble subsidiary that’s at the heart of the accounting probe during the period under investigation, and are said to be considered “persons of interest” by Singapore. Both are due to continue in their roles after the restructuring.

“It has been a long, and at times difficult, journey” Brough said in a statement Thursday. “It is now for New Noble to take the business forward under the experienced leadership of CEO Will Randall and his team, who will now have a stable business platform and the financial resources necessary to realise the full potential of the business.”

Key elements of Thursday’s restructuring
  • New Noble acquired all assets of the old company.
  • Senior creditors will own 70 percent of New Noble shares. Shareholders get 20 percent and management holds 10 percent.
  • New Asset Co. Bonds, New Trading Co. Bonds, New Trading Hold Co. Bonds and Senior Creditor SPV Shares have been issued to creditors.
  • New trade finance facilities of $800 million have been made available.
  • Scheme claims of creditors have been released.
  • All existing notes are canceled; along with existing perpetual capital securities, they should be de-listed Dec. 21.

The restructuring was originally meant to become effective in about July, according to an initial timeline earlier this year. But the process ran into repeated delays, becoming an extraordinary corporate saga. Further steps remain, including a countdown to the so-called bar date of Jan. 14.

The rescue has been very costly, with millions of dollars in payments to lawyers and advisers. Restructuring costs totaled more than $145 million in the first nine months of the year, according to the company’s earnings release in November.

In the Bermuda court hearing last Friday, a lawyer for the company said there are no plans for New Noble to be listed on any exchange. Still, its old stock remains suspended in Singapore as the investigation continues.

As part of the probe, the Monetary Authority of Singapore is looking into whether officers of Noble and Noble Resources International Pte Ltd. played a role in any breaches of the law. Authorities have also said they had expanded their investigation to Noble’s auditor, Ernst & Young LLP.

Under the $3.5 billion debt-for-equity rescue, Noble’s debt burden will be halved. After a string of asset sales, its operations have been reduced to a core business focused on coal, LNG and alumina. The company reported a net loss of $99 million in the three months to September.

©2018 Bloomberg L.P.

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