Noble Group to sell oil liquids unit to Vitol

SINGAPORE: Struggling commodities trader Noble Group agreed to sell its Americasfocused oil trading business to Vitol for about US$580mil as part of a debt-cutting strategy, and warned of a big loss for its third quarter.

Yesterday’s move came after Reuters reported late on Friday that Vitol, the world’s largest oil trader, was nearing a deal to buy Singapore-listed Noble’s oil liquids unit.

Noble, whose founder Richard Elman took advantage of a commodities bull run to build it into one of the world’s biggest traders after starting it in 1986, is shrinking to an Asiancentric company focussed on its core coal trading, LNG and freight businesses.

It is slashing jobs and selling assets to reduce debt and win support from lenders after a crisis-wracked two years. In July it agreed to sell its smaller gas and power business to Mercuria.

“I guess the question is when are they going to basically turn around their business, which is quite key. If they can actually provide more details, what sort of assets they can still sell, that would be great,” said Annisa Lee, Nomura’s head of Asia ex-Japan’s flow credit analysis. Hong Kong-based Noble was plunged into crisis in February 2015 when Iceberg Research questioned its accounts, and then the company was hit by a commodities downturn.

While Noble has stood by its accounts, the upheaval triggered a share price collapse, credit downgrades, a series of writedowns, as well as fund raising and management changes. Noble’s market value has plummeted to less than US$400mil from US$6bil in February 2015.

Noble said gross proceeds from the sale of its oil liquids business would be US$1.4bil, and after deducting debt of about US$836mil, cash proceeds would be about US$580mil.

“It gives the company some positive momentum going into a liability management exercise and it likely raises recovery realizations under a restructuring scenario modestly,” said Todd Schubert, fixed income analyst at Bank of Singapore.