Noble to defer coupon payment, confirms US$2b credit extension

Singapore

NOBLE Group on Tuesday said it will be deferring coupon payment on its perpetual bonds due a week later, as it confirmed news reports that it had extended its US$2 billion credit facility by four months.

The struggling commodity trader also said that Peter James O'Donnell, appointed as an independent non-executive director in May, will step down from the role to take on an executive role as special adviser to the chairman on corporate strategy.

The group's shares slipped at the opening bell as the market reacted to the deferment of the coupon payment. Still, the stock eventually rallied in the second half of the day to close at 50.5 Singapore cents - up 6.3 per cent or three cents from its previous close - extending its 46 per cent gain on Monday.

Some 161.4 million shares changed hands, making Noble the second most active stock on the exchange.

Noble said it continues to be in talks with its bankers in relation to the revolving credit facility that is due in May 2018. "Whilst no assurance can be given as to the outcome of these discussions, the group believes that these are constructive and are being conducted in good faith by all parties."

It also said that the strategic review helmed by new chairman Paul Brough will be completed once the discussions with banks and potential investors become clearer. The discussions with potential investors are "ongoing and constructive", though there is no assurance they will result in a transaction, it added.

Giving an indication of the possible outcomes of the review for the first time, the group revealed that the results will likely include an asset realisation programme to maintain liquidity, and further reduction in overhead expenses.

Noble also said that it has informed holders of its US$400 million perpetual bonds that it will defer payment of a coupon that is otherwise due on June 26.

Lorraine Tan, director of equity research in Asia at Morningstar, believes that this was part of the agreement Noble made with the banks.

"Obviously the banks want to make sure that whatever they're extending is used towards the physical trading business and not towards repaying the company debt," she told The Business Times.

The move to have Mr O'Donnell take on an executive role was also not unexpected, she added. "The changes on the board level are consistent with what's been going on with the company to put in some expert advice on the next steps forward."

Mr O'Donnell is familiar with the inner workings of the group, having been a non-executive director with Noble from March 1999 to January 2007, and an executive director and senior executive vice-president in 2010.