Noble Group issues guidance on expected Q2 net loss of up to US$140m

MOST of mainboard-listed Noble Group's senior creditors have acceded to its binding restructuring support agreement, supported by key shareholders, the beleaguered commodity trader announced on Thursday.

It has also snagged a favourable court judgment in a long-running lawsuit brought by a former chief executive against the group.

But Noble warned that it expects to report a net loss for the three and six months to June 30, on the back of restructuring expenses and net finance costs. It is also skipping an upcoming coupon payment due to noteholders, a move that it attributed to the restructuring deal with consenting creditors.

The group said in its profit guidance that it expects to report a net loss of between US$115 million and US$140 million for the second quarter, bringing the net loss for the six months to between US$185 million and US$210 million altogether.

Such a hit - which comes on a projected profit before interest, tax and restructuring expenses of US$35 million to US$50 million for the quarter - would put Noble in a negative net asset position of US$1 billion as at June 30. 

The group pegged restructuring expenses at about US$95 million and expects net finance costs and tax to come in between US$70 million and US$80 million in the same period.

The board of directors also announced on Thursday that the company will not make payment on the coupon due on July 30 for 6.75 per cent US dollar fixed-rate senior notes that are due in 2020, in view of the restructuring deal involving consenting creditors. The principal amount of the notes is about US$1.18 billion.

Noble has stopped making - but continues to accrue - interest and principal payments on its senior debt, under the restructuring support agreement inked in March. It said in an update on Thursday that more than 86 per cent of senior creditors have agreed to the deal, while shareholders with a combined stake of more than 30 per cent have signed irrevocable undertakings to support the agreement.

The shareholders include not just the company's largest investor, founder Richard Elman, but also Abu Dhabi's Goldilocks Investment Company, and a consortium including Value Partners and Pinpoint Asset Management.

Winning over Goldilocks - which had been a trenchant opponent of an earlier debt-for-equity restructuring proposal - was key to securing the present agreement.

"The company continues to engage with the (Singapore Exchange) on the proposed restructuring and a circular to the company's shareholders containing further information, together with a notice of a special general meeting, will be dispatched to shareholders in due course," said Noble.

"Global commodity prices have been strong over the first six months of 2018, supported by both growth in demand and factors affecting supply such as production cuts and economic sanctions.

"However, while operating income from supply chains improved in the quarter, the group's performance in Q2 2018 continued to be impacted by the ongoing constraints on liquidity and availability of competitive trade finance to support its operations, along with the impact of restructuring expenses associated with implementing the proposed restructuring."

Noble said in its announcement: "However, the board believes that the proposed restructuring, once implemented, should restore shareholders' equity and create a sustainable capital structure which will allow the group to reposition its business and expand on its position as a leading industrial and energy products supply chain manager in the Asia-Pacific region."

Noble is due to release its consolidated financial statements for the half-year on Aug 14.

Separately, Noble announced that it has had the legal claims against it dismissed in the High Court case brought by former chief executive Ricardo Leiman, who sued in 2012 for a bonus and shares.

"The court further ordered the plaintiffs to pay two-thirds of Noble's costs in the proceedings," the announcement added, referring to Mr Leiman and the trustee of his family trust.

The counter closed flat at S$0.14 before the announcements were made.