Noble Group signs workout deal with 46% senior debt holders

HONG KONG: Noble Group Ltd has signed an agreement with a group of senior creditors to reorganise about US$3.5bil of debt, marking further progress in a deal that will halve the company’s debt and give creditors control of the embattled commodity trader.

The ad hoc group of creditors that signed a binding restructuring support agreement holds 46% of its senior debt, Noble Group said in a Singapore stock exchange filing yesterday. Deutsche Bank AG has also signed up to the plan, while ING Bank NV is in process of acceding to it. Both lenders own 4% of the senior claims, it said.

With the agreement in hand, Noble Group could solicit consent from other senior creditors. The ad hoc group is in talks with another batch of creditors holding about 15% of its senior claims, who have indicated their broad support for the plan, the filing shows. Noble Group has also improved the terms for shareholders and perpetual note holders after their opposition to the deal.

The agreement marks a step toward survival for Noble Group, which is teetering on the brink of collapse in a saga that started three years ago when then-unknown Iceberg Research began publishing critiques of its accounting. Since then, the company has been battered by losses and its stock driven to near two-decade lows. The pact also comes before a US$379mil 2018 bond maturity on March 20.

“This isn’t a particularly large increase in participation towards the RSA given how much time they’ve spent on it,” said Alex Turnbull, Singapore-based managing partner at Keshik Capital Pte. “There is still a very good chance for a hard default when the 2018 bonds come due on March 20. This gap of required votes is not closing fast enough given coming maturities.”

Noble Group unveiled an in-principle agreement with the ad hoc group in late January.

Among new details in yesterday’s filing:

> Management, which has an option to buy 10% stake from senior creditors, will share half of that option with prevailing shareholders that’s exercisable over five years;

> Noble will grant management a one-off performance-based option to subscribe a further 5 percent equity in the company, with target equity value of US$2.1bil; management will share half of that option with shareholders;

> Noble Group will get a US$600mil three-year trade finance facility, a type of funding that’s backed by actual supplies of commodities, and a US$100mil hedging instrument;

> The company has also improved the payout for holders of perpetual bonds, which don’t have a maturity date, to US$25mil, from US$15mil tabled in January.

Noble Group also asked senior creditors who wish to participate in the trade finance deal to sign up by April 6.

Noble’s 2018 notes rose about 1 cent on the dollar to 50.6 cents as of 12:29 pm Hong Kong time, according to Bloomberg-compiled prices. Its 2022 notes climbed 1.5 cents to 50.5 cents, while the perpetual notes lost 0.6 cent to 8.4 cents. Shares of the company were halted in Singapore for the announcement. — Bloomberg