Noble Group says board to seek insolvency protection if restructuring fails

A Noble Group sign is pictured at a meet-the-investors event in Singapore August 17, 2015. (Reuters pic)

HONG KONG: Noble Group Ltd warned on Monday that it would begin insolvency proceedings if the beleaguered commodity trader’s US$3.4 billion debt restructuring proposal was not approved by shareholders.

Noble’s debt restructuring process is seen as critical for the firm’s survival. But the deal has been opposed by some bondholders and shareholders, including Goldilocks Investment Co, which has an 8.1% stake in the firm.

Goldilocks has filed a lawsuit with a Singapore court against the commodities trader and some of its former and current senior executives, alleging they inflated Noble’s assets.

Defending its proposal, Singapore-listed Noble said on Monday that the support of its senior creditors and trade finance banks depended on a successful debt restructuring.

“In the absence of such support and a successful restructuring, the company would no longer be a going concern and the board would … be required to seek insolvency protection,” it said in a filing to the Singapore exchange.

“Under such circumstances, existing shareholders would not receive any recovery on their shares in the company.”

Any insolvency proceedings would take place in the United Kingdom, aiming to maintain more value for the stakeholders than would be available on a liquidation.

Once Asia’s largest commodity trader, Hong Kong-headquartered Noble was plunged into crisis in February 2015 when Iceberg Research questioned its books. Noble has stood by its accounting.

Noble has been negotiating a debt-for-equity swap for months after selling billions of dollars of assets, reporting big losses due to a severe commodities downturn, and cutting hundreds of jobs over the past three years.

In its latest statement, Noble said its board was satisfied there was a reasonable prospect the restructuring could be completed, allowing the firm to continue as going concern, given the support of senior creditors for existing management.

Under the deal, Noble is seeking to halve its senior debt and hand over 70 percent of the restructured business to creditors. Earlier this month, Noble said it had finalised the restructuring agreement with a group of senior creditors holding 46 percent of its debt, and was in talks with others.