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Goldman, hedge funds drawn Into Noble Group's legal battles

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After years of crisis marked by billions in losses and a default, Noble’s battle for survival has descended into legal fights and public sparring between the company, its creditors and Goldilocks, which is fighting the rescue, saying it’s unfair. PHOTO: REUTERS

[SINGAPORE] Noble Group’s dissident shareholder Goldilocks Investment Co listed a raft of hedge funds and banks, including Goldman Sachs Group and Deutsche Bank, as defendants in its legal battle against the commodity trader, as the fund presses on with a bid to stop its debt-for-equity swap.

Goldilocks last week initiated legal action in Singapore’s High Court against Noble, seeking to halt the restructure and block any attempt to move its main interests to the UK. According to a summons seen by Bloomberg, the Abu Dhabi-based fund listed Noble and its directors as defendants, as well as hedge funds and banks that it says are creditors supporting the planned rescue.

The defendants include Goldman Sachs (Asia), Deutsche Bank, ING Bank, as well as Taconic Capital Advisors, Davidson Kempner Capital Management LP, Och-Ziff Capital Management Group, Strategic Value Partners, BFAM Partners (Hong Kong), Varde Partners Asia Pte, Arkkan Capital Management, Cowell & Lee Advisors and Attestor Capital.

After years of crisis marked by billions in losses and a default, Noble’s battle for survival has descended into legal fights and public sparring between the company, its creditors and Goldilocks, which is fighting the rescue, saying it’s unfair. Houlihan Lokey, which is acting for the ad hoc group of creditors backing the proposal, has said the deal is only viable option. At a special general meeting convened in Singapore on Monday, Chairman Paul Brough also highlighted the extreme difficulties the company is now facing.

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Founder’s Support

At present, more than 80 per cent of senior creditors support the deal, which will see about half of the US$3.4 billion debt burden written off, as does top shareholder and founder Richard Elman. Under the proposal, existing shareholders would get 15 per cent in a new company, which Goldilocks says is too small. It’s also raised concerns about the company’s management and their actions in recent months as the rescue plan has come together.

In a separate case on Friday, the court approved Goldilocks’ request for an injunction to stop Noble from holding its annual general meeting, which had been scheduled for April 30, but it didn’t restrain the company from holding future special general meetings. On Monday, Noble went ahead with such a meeting, where attendees voted to approve a vessel disposal. Before that, the disputed AGM was opened, then immediately adjourned.

In remarks to shareholders at the ship-sale SGM, Brough that said while he believed the company could pull off the restructuring, there’s a limited period of time to get the deal done. The trader’s financial position is “critical", and one reason it wants to avoid insolvency is that it doesn’t want contracts, including some long-term coal contracts, “invalidated", he said.

‘Vigorously Defend’

Representatives from ING, Taconic, Davidson Kempner, Varde, Strategic Value, Attestor and Cowell & Lee were yet to respond to requests for comment, some of which were made outside usual business hours. Deutsche Bank, Goldman, BFAM, Arkkan and Och-Ziff declined to comment. Nobody answered calls to Houlihan Lokey’s media advisers in Asia and an external representative for Noble couldn’t immediately comment.

The claims by Goldilocks “are an intentional attempt to obfuscate, delay, derail and/or prevent the implementation of the restructuring,” Noble said in a statement on Thursday. “The company and its directors will vigorously defend each of the claims and, at the appropriate time, seek costs orders.”

Last week, creditors backing the restructure warned time is fast running out to get the deal through, saying it’s the sole option to save the trader. Houlihan Lokey hasn’t identified the members of the ad hoc group it represents.

Noble Group shares in Singapore capped another weekly loss before being suspended on Friday after the court’s decision on the AGM. On Monday trading restarted, and the stock closed 4.6 per cent lower at 8.3 Singapore cents.

“We need to get it done ASAP,” Chief Financial Officer Paul Jackaman told Bloomberg in an interview after the vessel-sale SGM, referring to the restructuring. He declined to comment on the trader’s first-quarter performance. Referring to the chairman, he said: “You heard Paul talk about how it needs to happen as soon as possible. I am confident. He said he’s confident and I share his view. But I also share the sense of urgency.”

BLOOMBERG