Noble Restructuring in Doubt as Elman Said to Want New Deal
(Bloomberg) -- Richard Elman, the founder and largest shareholder of Noble Group Ltd., is pushing the embattled commodities trader’s creditors for a new restructuring deal, according to people familiar with the matter, casting fresh doubt on the survival of the company.
Noble needs the support of at least half of the shareholders that vote in a special meeting for a $3.5 billion debt-for-equity restructuring plan that will all but wipe out existing equity investors. If shareholders reject the deal, the company plans to file for insolvency in London.
Elman, who resigned from the board last month due to “differences of opinion” with the firm’s directors and creditors over its future, is pushing to increase the stake that current shareholders get in Noble immediately after the restructuring to 15 percent to 20 percent, from 10 percent under the current deal, the people said, asking not to be named discussing private conversations.
The 77-year-old British executive also wants a say in the company’s future, potentially including a seat on the board, one of the people said.
Elman is pushing for a better deal for himself and others days after the Singapore’s stock market regulator criticized the restructuring plan and asked creditors to reconsider some of its proposals.
Noble said on Monday that it’s “in discussions with shareholders and the SGX on the restructuring.” The company declined to elaborate further. It’s unclear whether Elman is talking to creditors via the company or directly.
Noble had been planning to seek irrevocable undertakings from shareholders to support the deal in mid to late March, according to a presentation published March 14. It has yet to announce any irrevocable shareholder undertakings.
The company has long said it would prefer to secure shareholder approval for the deal rather than complete the restructuring via an insolvency and administration process in the U.K. that could damage its commercial relations. As such, shareholders may have some leverage to convince management and the creditors to re-open the deal.
However, changing the share allocation under the restructuring deal may require the company to reopen discussions with its senior creditors, of which 70 percent have already agreed to the current deal, according to a company announcement on Monday.
Elman last month trimmed his stake in Noble from 18.07 percent to 17.94 percent. The sale was small but symbolic: Elman, who started Noble with $100,000 of his savings in 1986 in Hong Kong and grew it to a $10 billion giant at one point, sold shares only once previously in the company’s history, he testified in a court case last year.
The two representatives of China Investment Corp. on Noble’s board have also stepped down, suggesting that Beijing has misgivings about the restructuring plan. The sovereign wealth fund is the second-largest shareholder in Noble, with a 9.5 percent stake worth only $6 million at current prices. CIC paid $850 million for its initial investment in Noble in 2009.
The third-largest shareholder in Noble -- is already opposed to the restructuring plan. Goldilocks Investment Co., an Abu Dhabi-based fund, controls 8.1 percent of Noble. Together, the top five shareholders in Noble, which besides Elman, CIC and Goldilocks include Orbis Allan Gray Ltd and Prudential Plc, control 48.5 percent of the shares.
On Tuesday, Goldilocks renewed its call for Noble Group’s shareholders to oppose the current restructuring plan, describing it as “highly prejudicial,” according to a statement. The fund said “it welcomes Mr. Elman’s position in opposition to the inequitable” restructuring support agreement.
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