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[SINGAPORE] Noble Group's chief executive officer said the region's top commodity trader still has the support of its banks, stepping up efforts to restore confidence after shareholders backed the sale of its agricultural unit and the company nibbled away at its debt burden by buying back bonds.
Stockholders at a special general meeting in Singapore approved sale of the 49 per cent holding in Noble Agri Ltd to Cofco Corp for at least US$750 million, with 90 per cent of 4.03 billion shares represented at the gathering endorsing the deal. CEO Yusuf Alireza told shareholders the sale would help the company to improve liquidity, and said separately banks continue to support the company.
Noble Group has extended losses in 2016 after Standard & Poor's joined Moody's Investors Service in cutting the company's credit rating to junk, and as investors shunned commodity companies amid a rout in raw materials. The Hong Kong-based trader said earlier this month that it's confident the Noble Agri deal would be approved, and will help its rating metrics to exceed those required for investment-grade credit. The company announced further bond repurchases Thursday, paring its debt burden.
"Banks are concerned about the sector, investors are concerned about the sector," Mr Alireza told shareholders ahead of the vote, referring to commodities. "The best thing to do is to show to our shareholders we have liquidity." After the result, Alireza told shareholders that the company has some US$2.6 billion of debt that is maturing and these debts can be rolled over, without specifying a time frame. Noble Group's banks continue to support the company, he said in response to a question.
Noble Group had US$14.2 billion of liabilities on Sept 30, according to its latest financial report, including US$2.5 billion of bank debt and US$458 million of bonds due within 12 months. It completed a US$1.1 billion credit facility in October from six banks led by Bank of Tokyo-Mitsubishi UFJ Ltd, following a US$2.3 billion of syndicated-loan facility in May from 35 lenders.
Some of that debt has already been repurchased. The company bought back US$31.6 million of senior notes due in 2020, or 2.6 per cent of the total principal amount, with US$1.18 billion outstanding, Noble Group said in a statement early on Thursday, hours before the SGM got under way. The trader also repurchased US$1 million of notes due 2018.
Noble Group's shares traded unchanged at 27.5 Singapore cents at 2:53 pm and are 31 per cent lower this year, the worst performer on the benchmark Straits Times Index. The stock sank 65 per cent last year as raw materials fell, and the company's accounting and finances were challenged by Muddy Waters LLC and a group called Iceberg Research. Noble Group rejected the claims.
Chairman and founder Richard Elman said he planned to make Noble Group into a smaller, more nimble company, according to comments to Reuters earlier this month in which he forecast that the commodity cycle was bottoming. Plans to bring new investors into the company were taking time, Elman said.
Proceeds from the sale of the Noble Agri stake will be used to repay debt, the company said in a statement on Dec 23. The transaction will result in a non-cash loss of US$546 million, or the difference between the sale price and carrying value of the asset as of Sept 30, the company said.