Noble Group in talks on capital structure, liquidity

SINGAPORE: Struggling commodities trader Noble Group said it has started talks with stakeholders about potential options to address its capital structure and lack of liquidity, as part of a strategic review.

Noble, once one of the world’s biggest commodity traders, has shrunk to an Asian-centric company focused largely on coal and freight trading after a crisis-wracked two years and is slashing jobs and selling assets.

The company faces major debt repayments early next year and analysts and rating agencies have warned it will find it tough to service its debt in its current state.

In a statement on Wednesday, Noble said talks were at a preliminary stage, but the principles being discussed were in line with its objectives of managing the maturity of its borrowings to make the best use of available cash for the foreseeable future and treating all stakeholders fairly.

Noble said it would prioritise near-term liquidity, and would aim to continue to operate on a normal basis.

Noble’s shares, which tumbled to their lowest in nearly two decades on Tuesday, rose 6% on Wednesday.

The firm earlier this month reported a third-quarter loss of US$1.17 billion, hit by charges from disposals of some of its businesses.

Rating agency Moody’s said this week that Noble’s disposals, including its remaining oil business to competitor Vitol, was “challenging its ability to generate profit and cash flow to service the remaining debt.” 

Noble has US$400 million of medium-term notes due March 2018 and US$1.14 billion of senior unsecured revolving credit facilities and a term loan due May 2018, Fitch Ratings noted on Tuesday.

If Noble’s liquidity deteriorates to the point where it becomes uncertain if it can repay or refinance that debt, Fitch said it may ”consider downgrading the rating to ‘CC’, which indicates default of some kind appears probable.” 

Noble’s net debt decreased by US$112 million to US$3.7 billion in the third quarter. But it has risen by US$833 million in the year to date. - Reuters