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China's Cedar interested in Noble Group purchase: sources

[BEIJING] Cedar Holdings Group, a Chinese conglomerate, has expressed interest in buying control of commodities trader Noble Group, according to people with knowledge of the matter.

Cedar has made an informal approach to some major Noble Group shareholders, although no formal talks have started, the people said, asking not to be identified because the information is confidential. Noble shares surged as much as 37 per cent to 28 Singapore cents, the highest since December, before trading at 27 cents at 1.24pm, prompting a query from the Singapore Exchange .

A Cedar Holdings representative declined to comment; an external spokeswoman for Noble Group couldn't immediately comment.

Noble Group is battling for survival after a crisis marked by billions in losses and a string of asset sales. The Hong Kong-based company is racing to hammer out a deal on restructuring about US$3.5 billion in debt before a coupon payment falls due on Jan 29, people familiar with the matter said earlier. Its market value has collapsed from a peak of more than US$10 billion to less than US$300 million.

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Cedar is the largest private company in Guangzhou and ranks 16th nationwide, with 157 billion yuan (S$32.4 billion) in 2016 sales, according to its website. Founded in 1997, Cedar Holdings' businesses include supply chain, chemicals, tourism, real estate and finance. The firm controls two listed companies: Zibo Qixiang Tengda Chemical Co and Sinoer Men's Wear Co.

The restructuring talks, which started in November, are coalescing around a deal that would involve converting much of Noble Group's unsecured debt into equity. The agreement could result in the dilution of the stakes of current equity holders, including founder Richard Elman, who has an 18 per cent interest, and China's sovereign wealth fund with 9.5 per cent.

Noble Group must pay US$39.7 million of interest due on Jan 29 on its bonds maturing 2020, according to Bloomberg calculations. It's unclear whether the company would pay the coupon while in restructuring talks, but if it fails to pay it would be declared in default after a brief grace period. It also has bonds due in 2018 and 2022.

The company said this month it closed the sale of its Noble Americas Corp unit to Vitol at a lower price than estimated. The disposal was completed for US$400 million, which includes proceeds from an earlier disposal of its gas and power unit, compared with the illustrative figure of US$575 million given in October.

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