Tue, Feb 20, 2018 page6

• Noble Group flags a US$5bn loss

  NEGATIVE FOURTH QUARTER: Entering a critical phase of negotiations with creditors, the company said the board believes the plan ‘should create a sustainable capital structure’

  • Bloomberg
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  Noble Group Ltd (來寶集團), the commodity trader battling to survive, warned that it is to report another vast loss, including from the operations meant to sustain a revamped business, and while it signaled progress in debt restructuring talks, hurdles to a deal remain.

  The Hong Kong-based company is to report a net loss of US$1.73 billion to US$1.93 billion for the final quarter of last year, potentially bringing last year’s losses to almost US$5 billion, it said in a statement early yesterday.

  That meant it had a negative net-asset position of US$650 million to US$850 million on Dec. 31 last year.

  

  Noble Group founder and chairman Richard Elman poses at his office in Hong Kong on Jan. 22, 2016.

  Photo: Reuters

  Noble Group announced an initial deal to restructure US$3.5 billion in debt last month, fending off bankruptcy after a three-year crisis marked by losses, write-downs and controversial accounting.

  Since that debt-for-equity plan was unveiled, the proposal has drawn fire from a top shareholder as well as some bondholders.

  With the company now entering a critical phase of negotiations with creditors to nail down the rescue, it said talks are productive and signaled that more than half of its senior creditors might be willing to endorse the deal.

  The expected fourth-quarter loss “results in a negative net-asset position,” it said. “However, the board believes that the proposed restructuring, once implemented, should restore shareholders’ equity and create a sustainable capital structure, which would allow the group to rebuild its business in Asia.”

  As part of the proposed deal, Noble Group has reached an in-principle agreement with an ad hoc creditors’ group and ING Groep NV, as a fronting bank, for a three-year US$700 million finance facility, which is to be made available when the restructuring is effective, it said in the statement.

  The 2022 notes gained US$0.004 to US$0.492 at 11am in Singapore, according to Bloomberg-compiled prices.

  In the past two weeks, the bonds lost almost US$0.02 amid opposition to the debt plan by some investors. The shares rose as much as 7.1 percent, and were 2 percent higher.

  For the full year, the net loss is seen between US$4.78 billion and US$4.98 billion.

  Of the expected loss for the fourth quarter, US$50 million to US$100 million was made on continuing operations in hard commodities, freight and liquefied natural gas, and a further US$225 million to US$275 million was in businesses it has sold, the company said, adding that there was a further exceptional loss of US$1.45 billion to US$1.55 billion, including non-cash mark-to-market losses on derivatives positions.

  Under the rescue plan, which has been backed by about one-third of the creditors in the ad hoc group, about half of the debt would be switched into new equity. All existing shareholders would get a 10 percent stake in the revamped company. Separately, perpetual bondholders are being offered a few cents on the dollar.

  Noble Group said the ad hoc group controls 36 percent of its senior debt — obligations that include bonds due this year and in 2020 and 2022, as well as credit facilities.

  In addition, that group’s advisors are in talks with holders of a further 15 percent of the debt, who have indicated “broad support” for a deal, the company said.

  Given talks with creditors and finance provided by its banks, “the board is, on balance and on the basis of legal advice, satisfied that the group can continue as a going concern, until such time as the restructuring is completed,” the company said.

  Full-year results are due on Wednesday next week.
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