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Noble stock up on news of potential buyer

Counter rises to mid-day high of 28 Singapore cents, up 37%, after report of Chinese conglomerate's interest

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Noble Group stock was emboldened by news report that the embattled commodities trader's hopes for the sale of an interest in the group as part of a rescue plan may not be a long shot after all.

Singapore

NOBLE Group stock was emboldened by news report that the embattled commodities trader's hopes for the sale of an interest in the group as part of a rescue plan may not be a long shot after all.

A Bloomberg news report that a Chinese conglomerate Cedar Holdings has expressed interest in buying control of the Hong Kong-based trader drove Noble's shares to a high of 28 Singapore cents on mid-day Monday - up 7.5 Singapore cents or 37 per cent.

The rush tapered off with the counter finishing the day at 27 Singapore cents with a gain of 6.5 Singapore cents or nearly 32 per cent. Some 35 million shares worth S$9.2 million exchanged hands, making it the day's sixth most active counter.

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This year so far, the stock is up 35 per cent.

The renewed interest in the stock prompted a trading activity query from the Singapore Exchange.

In response, Noble echoed its previous remarks - that it was in talks, "which continue", with various potential strategic parties and creditors.

These talks are "open and constructive" and "moving forward" but there is no assurance on their possible outcome, it added.

Cedar, headquartered in Guangzhou, China, is reported to have made an informal approach to some major Noble Group shareholders. No formal talks have started, said Bloomberg, quoting unnamed sources.

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.

Noble has been locked in talks with creditors to resolve its US$3.5 billion debt headache. The discussions, Noble has said in the past, are to manage the maturity of its borrowings to optimise the use of available cash. Analysts generally believe that a strategic investor for Noble may be hard to pin down at this juncture until it gets its house in order.

The talks with creditors, it is believed, revolve mostly around swopping debt for equity as well as terming out the rest for a "long period" by issuing new debt for old and borrowing against certain assets.

Under a strategic review led by chairman Paul Brough, Noble has also sold a string of assets.

A week ago, it announced the completion of the sale of Noble Americas Corp (NAC) to Vitol US Holding for an estimated net proceeds of US$400 million.

As its global oil liquids business was primarily conducted through NAC, the deal's close also marked the conclusion of its monetisation of the oil liquids business. Noble has also sold its North American Gas & Power businesses.

There are other pressing issues. Noble needs to cough up about US$39.7 million of interest due on Jan 29 on its bonds maturing 2020 or face the risk of default, Bloomberg reported. This could be dicey as the company also has bonds due in 2018 and 2022.

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