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Noble Group CEO says markets 'difficult' as debt deal sought

Thursday, April 14, 2016 - 09:29

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Noble Group Ltd chief executive officer Yusuf Alireza said that the commodities markets remain difficult as he presses on with efforts to refinance the trader's debt.

[SINGAPORE] Noble Group Ltd chief executive officer Yusuf Alireza said that the commodities markets remain difficult as he presses on with efforts to refinance the trader's debt.

"The markets are difficult. To sit here with confidence and say the worst is behind us is just not realistic," Mr Alireza said in a Bloomberg Television interview in Singapore.

"Our jobs are just to come in every day and do our jobs, focus on the business and deliver results and, in the end, the market will judge us and our investors will judge us."

Asia largest commodity trader is seeking to chart a recovery in 2016 after a savage year in which it posted the first annual loss in almost two decades, had its credit-rating cut to junk and saw its shares sink along with a rout in raw material prices.

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While the costs of the group's revolving-credit facility were seen as going up, its weighted average cost of debt was expected to remain about the same, Mr Alireza said on Thursday, speaking ahead of the company's annual general meeting in the city-state.

"What's important to us is not one transaction, the revolver, what's important is the weighted-average cost of our debt," said Mr Alireza, who was appointed as CEO in 2012.

"That's what's important in terms of the costs of our financing."

Shares Rebound

Noble Group shares - which collapsed 65 per cent in 2015 and were subsequently removed from the blue-chip Straits Times Index - have climbed 10 per cent this year to close at 44 Singapore cents on Wednesday.

Its March 2018 notes have surged in six of the past seven weeks to 78.6 US cents on the US dollar, up from an all-time low of 40.7 US cents on Jan 22, according to Bloomberg-compiled prices.

Last year, Mr Alireza strove to turn around the company's fortunes, selling assets to raise cash including the remaining 49 per cent stake in Noble Agri Ltd, boosting transparency and taking writedowns. 

Founder and chairman Richard Elman wrote in the annual report released last month that the company needs to be smaller and more nimble, while saying that it wasn't possible to tell when the commodity markets would turn.

The Hong Kong-based company is said to be facing higher financing costs to arrange an unsecured loan of at least US$1 billion, and is seeking US$2.5 billion in another loan that'll be backed by inventories.

During the results briefing in February, Mr Alireza had said the company aimed to re-finance before a May deadline.

"Historically, when we had fixed assets like sugar mills and crushing plants, you needed long-term debt," Mr Alireza told Bloomberg TV, adding that in future Noble Group was likely to have a greater share of secured financing.

"Now, as most of our assets are inventory we will fund it with revolvers and bond base. The cost of bond base, which is secured financing, is much lower."

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