DEUTSCHE BANK UPS NOBLE RESCUE BETS
Lender offers to buy senior unsecured bonds for 45pc of face value
DEUTSCHE Bank AG is doubling down on a bet that troubled commodities trader Noble Group Ltd will be able to pull off a US$3.5 billion (RM14.35 billion) reorganisation.
With less than a week to go before Noble shareholders vote on the debt-restructuring plan, the German lender’s London office is offering to buy the company’s senior unsecured bonds for 45 per cent of face value, according to a memorandum seen by Bloomberg.
The bank says any purchases would be on behalf of itself, and that the tender process will increase support for the restructuring as any notes acquired would be committed to the restructuring.
Deutsche Bank has emerged as a key backer of Noble’s turnaround as existing lenders shed exposure to the commodities trader. It was one of the initial creditors to sign onto the restructuring in March, agreeing to help provide Noble with US$600 million in trade finance and a US$100 million hedging facility.
The German lender, along with ING Bank, held about four per cent of existing senior claims as of March, according to a statement at the time.
“Deutsche Bank is a finance provider to and active supporter of the proposed restructuring of the Noble Group,” said Deutsche Bank’s spokesman Sarah Stabler.
By offering to buy more of the debt, Deutsche Bank is essentially betting that investors are underestimating the potential payoff of owning a reorganised Noble.
The deal, in which creditors will swap their existing holdings for equity and new debt, would hand creditors a 70 per cent ownership stake. Existing equity owners, including top shareholder Richard Elman, would have their stakes diluted.
Elman has committed to vote in favour of the plan. The company also has irrevocable support from Abu Dhabi-based shareholder Goldilocks Investment Co and a consortium, including Value Partners Ltd and Pinpoint Asset Management Ltd.
Noble Group’s 2018 notes rose US$0.019 to US$0.467 on the US dollar as of 2.10pm in Hong Kong, while its 2022 notes gained US$0.06 to US$0.479, according to Bloomberg-compiled prices.
Those prices were in line with their average levels over the past two months. The company’s shares, which surged 21 per cent, here, are set for the biggest rally in about two months.
Noble is approaching the end game in its drawn-out restructuring after years of crisis, public sparring with investors and billions in losses that culminated with a March default on its debt.
KPMG has warned that failure to secure the restructuring plan could end in a liquidation that would give creditors as little as 20 per cent of face value.