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Noble Group faces key deadlines as threat of default lingers

[HONG KONG] Noble Group Ltd, the embattled commodities trader, faces several significant deadlines as it wrestles with a US$3.5 billion debt restructuring.

Once Asia's largest commodity trader, Noble's decline since 2015 has been marked by losses, concern it won't be able to pay its debt and accusations from long-time foe Iceberg Research that it inflated the value of some contracts. The next few weeks will be crucial, as Noble looks to push its debt restructuring through.

One focus is Dec 20. Lenders had agreed to waive certain rights under terms Noble committed to for its US$1.1 billion revolving credit facility until that day. That means the company may need to reach a deal with creditors by then to avoid a default, or seek another extension.

The company met with creditors in Hong Kong on Wednesday, according to people familiar with the matter. The meeting follows talks that started two weeks ago in London and continued last week in Hong Kong, and was to allow creditors to do further due diligence on the sustainability of the company's operations, one of the people said.

"If Noble's revolving credit facility lenders don't extend the covenant waiver, it will be a technical default on the facility," said Annisa Lee, head of Asia ex-Japan flow credit analysis at Nomura International (HK) Ltd. "That could trigger a cross default on the bonds. If that happens, Noble faces the possibility of going into liquidation, or a debt restructuring, depending on what creditors decide."

Noble's external media representative couldn't be immediately reached for comment.

Here are the deadlines to watch in coming months:

  • Dec 15, shareholder meeting: Noble agreed to sell most of its oil business to Vitol Group in October and will be holding a meeting in Singapore for shareholders to vote on the sale. Shares in the embattled commodity trader fell 5.9 per cent Thursday.
  • Dec 20, waiver expires: A covenant waiver on Noble's US$1.1 billion revolving credit facility expires. Noble's unsecured lenders, which are ranked the same as its unsecured bondholders, have extended the waiver before, but lenders could use it as a bargaining chip to improve their position.
  • Dec 24, perpetual coupon: A coupon payment is due for Noble's US$400 million perpetual securities, which have collapsed 46 US cents in the past year to 8.5 US cents on Thursday, according to Bloomberg-compiled data. Noble has already deferred payment on the notes once.
  • Jan 29, interest payment: Noble must pay about US$39.7 million of interest on its US$1.18 billion bonds maturing 2020, according to Bloomberg calculations. Those notes have fallen 42.4 cents to 40.1 cents on the dollar in the past year.
  • March 20, bond maturity: This is Noble's first significant bond maturity in 2018. It must pay US$379 million of securities on this day. The notes have slumped 42 cents in the past year to 49.3 cents on the dollar Thursday.
  • May 18, credit facility matures:  Noble faces its second significant debt maturity for 2018, when its revolving credit facility matures.