Noble Group skips paying bond coupon
SINGAPORE: Embattled commodities trader Noble Group has opted not to pay the coupon on a US$750 million (RM2.9 billion) bond, but said yesterday that it was “very close” to reaching final terms with a group of senior creditors over a proposed restructuring of its debt.
The company, which reported a US$4.9 billion loss for 2017, has been negotiating a US$3.4 billion debt-for-equity swap – crucial to its survival – after it sold billions of dollars of assets, took hefty writedowns and cut hundreds of jobs over the past three years.
“In reaching its decision not to pay the coupon, the board consulted extensively with an ad hoc group of the group’s senior creditors (the “Ad Hoc Group’) and took into consideration advice received from the group’s legal and financial advisors,” Noble said in a statement.
The coupon on the five-year 8.75% notes, which Thomson Reuters International Financing Review said garnered orders of US$2.4 billion last year, was due on March 9. Noble said that under the terms of the 2022 notes, it now had a 30-day grace period.
Some analysts had expected Noble not to pay the coupon while the company’s debt was being restructured. Noble has a US$379 million bond that matures on March 20.
Noble is seeking to halve its senior debt and hand over 70% of the restructured business to a group of senior creditors, known as the Ad Hoc Group, while existing equity holders would be diluted to 10% and company management would end up owning up to 20%.
“The board currently considers that the company is very close to reaching final terms with the Ad Hoc Group in respect of a proposed restructuring of the group’s unsecured liabilities,” Noble said.
The company’s debt restructuring deal has been opposed by some bondholders and shareholders including Goldilocks Investment Co, an Abu Dhabi Financial Group equity fund.
Noble, which had ambitions to rival global commodity traders such as Glencore and Vitol, has shrunk to its Asian roots, dealing in commodities such as coal and owning freight and liquefied natural gas businesses. – Reuters