Commodities merchant Noble Group (NOBG.SI) has finalized a restructuring agreement with a group of senior creditors holding 46 percent of its debt, and is in talks with others, as it races to launch a deal crucial to its survival.
The embattled firm has been negotiating a $3.4 billion debt-for-equity swap for months, after selling billions of dollars of assets, taking hefty writedowns and cutting hundreds of jobs over the past three years.
Hong Kong-headquartered Noble, once Asia’s biggest commodity trader with ambitions to take on global giants such as Glencore (GLEN.L), also outlined steps it would take if the deal doesn’t go through.
If shareholders do not approve the deal, the restructuring will be completed by “moving the group’s center of main interests to the United Kingdom, seeking the appointment of an English administrator to sell all of the assets of the company to New Noble,” Noble said, referring to a restructured company.
Noble’s Restructuring Support Agreement (RSA) has been signed by creditors known as the Ad Hoc Group and the firm is seeking support from another senior creditor, Deutsche Bank (DBKGn.DE), and trade finance provider, ING Bank, Noble said.
Joseph Swanson, senior managing director at Houlihan Lokey, financial adviser to the Ad Hoc Group, said the signing of the agreement was a landmark moment for Noble, and the Ad Hoc Group was looking forward to getting consent from creditors outside the core group.
Noble said the Ad Hoc Group was also in contact with other senior creditors who were holding an additional 15 percent of claims and had indicated their broad support for the deal.
Noble is seeking to halve its senior debt and hand over 70 percent of the restructured business to the Ad Hoc Group. It said on Wednesday that existing equity holders could be diluted to 15 percent, marking an improvement for equity holders from earlier discussions of the deal. Company management could end up owning 15 percent.
Noble’s debt restructuring deal has been opposed by some bondholders and shareholders such as Goldilocks Investment Co, an Abu Dhabi Financial Group equity fund.
IFR, a Thomson Reuters publication, reported that the restructuring proposal requires a vote of senior creditors holding at least 75 percent of its debt, of which 75 percent must vote in favor for the measure to pass.
Founded in 1986 by Richard Elman, who rode a commodities bull run to build one of the world’s biggest traders, Noble was plunged into crisis in February 2015 when Iceberg Research questioned its books. Noble has defended its accounting.
Noble’s market value has fallen to just S$223 million ($170 million) from $6 billion in February 2015. The company has a $379 million bond that matures on March 20.
Noble said Deutsche Bank has signed the RSA, and ING Bank was in the process of signing it. Together, they represent 4 percent of Noble’s claims.
Noble plans to launch its restructuring this month and said senior creditors keen to participate in the trade financing deal had to sign up by April 6.