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Noble Group said to lose key bank support as DBS cuts lending

[SINGAPORE] Noble Group Ltd, the commodity trader fighting for survival, lost support from one of its key banks as Singapore's DBS Group Holdings Ltd cut lending, according to a person with knowledge of the matter.

DBS sold its US$60 million stake in Noble's US$1.1 billion revolving credit facility due in May next year, and also closed some other financing to the company, the person said, asking not to be named because the matter is private. It's unclear whether the bank still has any remaining credit exposure to the trader.

The withdrawal by a core bank is the latest blow to Noble as it moves towards an all-but inevitable debt restructuring, battered by losses of more than US$3 billion so far this year.

Noble and DBS declined to comment. The move by DBS to cut its exposure to Noble was first reported by Debtwire.

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DBS had been a key supporter of Noble through a crisis at the Hong Kong-based trader that has run for more than two years. Noble Chairman Paul Brough recently mentioned DBS together with Societe Generale SA and ING Groep NV for having helped support the company through a crisis of confidence following its announcement of a surprise first quarter trading loss.

On an earnings call in August, Mr Brough highlighted "the great support we received from my bilateral banks, SocGen, ING and DBS" as having been key to securing sufficient trade finance to support Noble's Asian business - the part of the company that will remain after the sale of its US-focused oil unit to Vitol Group.

The bank, whose biggest shareholder is Singapore state investment company Temasek Holdings Pte, was a member of a steering committee of lenders under the RCF which was formed earlier this year.

Noble, which is listed in Singapore, fell on Friday to an 18-year low of 25 Singaporean cents, down 85 per cent year-to-date. The company, once worth almost US$12 billion, has seen its market capitalisation plummet to just US$241 million amid criticism of its accounting practices led by Iceberg Research.

FINANCING SQUEEZE

Noble has already experienced a drastic squeeze in financing availability - a key resource for trading houses whose core business is to buy and sell commodities using credit. It said on Thursday that liquidity headroom - a measure of capital available to fund its business - fell 43 per cent over the third quarter, while available cash at continuing operations shrank to the lowest in more than a decade.

On top of the RCF line, and a borrowing base loan that it's planning to close after the sale of its oil business, Noble has outstanding bonds maturing next year, 2020 and 2022 plus a perpetual note.

Noble has "had to manage liquidity very carefully," Mr Brough said on Thursday.

"That has obviously impacted our ability to trade and therefore our trading results."

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