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Noble Group perpetual holders unite to oppose restructuring

Holders of Noble Group Ltd's perpetual bonds joined forces to oppose the embattled commodity trader's US$3.5 billion restructuring plan.

[LONDON] Holders of Noble Group Ltd's perpetual bonds joined forces to oppose the embattled commodity trader's US$3.5 billion restructuring plan.

The group, which says it collectively holds more than 25 per cent of the perpetual bonds, has hired lawyers Latham & Watkins LLP to negotiate a better deal or "exercise remedies" against the Hong Kong-based company, according to a statement sent by Kevin Wu, portfolio manager at Pinpoint Asset Management Ltd. in Hong Kong, one of the holders.

Perpetual bondholders would receive a US$15 million payment in exchange for notes with a face value of US$400 million under the proposed restructuring plan that was unveiled last month. That's seen as a raw deal for perpetual holders given equity investors will retain 10 per cent of shares in the new company.

A spokesperson for Noble in Singapore referred requests for comment to an external public relations firm in London, which didn't reply to an email seeking comment out of normal business hours. A representative at Latham & Watkins' external public relations company said the firm couldn't comment.

Noble and its largest creditors are now rushing to push through the restructuring as it faces the maturity of US$379 million in bonds on March 20, while its trading performance continues to disappoint. The company is set to report an annual loss of almost US$5 billion later on Wednesday.

"The proposed restructuring is effectively a liquidation of the existing company that disregards the priority of the claims of the Perpetual Securities holders over the rights of the shareholders," the group of perpetual holders said in the statement. The holders plan to "negotiate a revised restructuring or, if necessary, exercise remedies against Noble and its management," they said.

It didn't say what remedies could be available if Noble doesn't improve the deal. The phrase is often used to refer to the legal right of creditors to seek payment if a company defaults on its obligations.

Any significant change to the perpetual bonds requires approval of 75 per cent, meaning that the group holds a blocking stake. However, Noble is planning to move assets from Bermuda-incorporated Noble Group to a new company if perpetual bondholders reject the US$15 million offer, Bloomberg reported earlier this month, leaving them as investors in an empty shell.

The group of perpetual bondholders joins Goldilocks Investment Co, Noble's fifth-largest shareholder, in publicly opposing the plan. In a statement earlier this month, Noble said it had backing from about 51 per cent of senior creditors for the restructuring.

Noble Group's perpetual bonds dropped 0.15 cent on the dollar Wednesday morning to 7 cents, according to Bloomberg-compiled data. The firm's 2020 and 2022 bonds were slightly higher while the 2018s edged down.