Noble Group Ltd (來寶集團), an embattled commodity trader that is trying to keep an investment-grade credit rating, sold its remaining 49 percent stake in its agriculture unit to China’s COFCO Corp (中國糧油) for at least US$750 million in cash.
Noble said in a statement yesterday that as well as the upfront payment, it might receive as much as US$200 million depending on the growth of the unit, known as Noble Agri (中糧來寶).
The entire proceeds will be used to pay down debt, the Hong Kong-based company said.
Shares of Asia’s largest commodities trader added as much as 5.7 percent to 0.465 Singapore dollars before trading at S$0.455 by 2:05pm, set for the highest close in more than a month.
Noble American depositary receipts rose 3.7 percent to US$6.19 in over-the-counter trading in New York on Tuesday after the announcement of the deal.
COFCO already owns the other 51 percent in Noble Agri, which it bought for about US$1.5 billion last year.
China’s largest food company aims to build a global agriculture trading operation to rival leading players such as Cargill Inc.
In recent months, Standard & Poor’s and Moody’s Investors Service said that they might reduce Noble’s credit rating to “junk” if its liquidity position does not improve.
The trader said six weeks ago that it planned to raise US$500 million through asset sales to avoid that fate.
While the sale proceeds would improve the trader’s financial leverage and liquidity, the full sale of the unit could weaken Noble’s business position, including its business diversity and long-term competitiveness, Standard & Poor’s said in a statement yesterday.
The trader’s liquidity is still weak for the rating level, the agency said, adding that its review will focus on the competitive position of Noble after the sale.
Noble said it would tentatively take a non-cash loss of US$546 million as it carried a higher valuation for Noble Agri on its books than the sale price.
Still, the trader said the cash injection from the sale would strengthen its balance sheet above the investment-grade threshold that both Standard & Poor’s and Moody’s use.
Noble said in a separate slide presentation that its adjusted net debt would drop to US$1.76 billion after the sale from US$2.51 billion beforehand.
COFCO, which bought last year a majority stake in Dutch grain trader Nidera BV, would become one of the world’s largest traders of agricultural commodities, such as wheat and soybeans, after completion of its latest deal.
The Chinese company is known within the industry by the initials “CNN.”
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