Noble Group's misery deepens as investors zero in on debt talks

[HONG KONG] Noble Group Ltd shares extended their decline to the lowest level since 2000 amid rising investor concern that the embattled commodity trader may not be able to engineer a turnaround even as it presses on in talks with core banks to try to secure more funding.

The stock tumbled as much as 11 per cent to 28.5 Singapore cents and traded at 30.5 cents at 1:22pm, heading for the sixth drop in seven sessions. The shares have sunk 83 per cent this year, cutting the group's market value to S$400 million. The company has about US$2.1 billion of debt obligations due by the end of 2018, according to data compiled by Bloomberg.

An external media spokesperson for Noble Group declined to comment.

The crisis at Noble Group has intensified this month ahead of a critical funding deadline, with a borrowing base facility due to expire. The company - which has been battling losses and ratings downgrades for more than two years - is asking lenders to extend the US$2 billion facility until the end of the year, according to a person with knowledge of the discussions. If agreed, that would hand co-Chief Executive Officers Will Randall and Jeff Frase more time to sell additional assets or persuade a strategic investor to come on board.

'Ability to Refinance'

"It's all up to their ability to refinance this month," Nicholas Teo, a trading strategist at KGI Securities Pte, said by phone, referring to the borrowing base facility. The stock could slump to 10 cents or even lower if the company can't negotiate a deal for an extension, Mr Teo said.

Of the US$2.1 billion due by the end of next year, Noble Group needs to repay US$600 million drawn on the borrowing base facility, US$379 million on a bond, and a US$1.14 billion revolving credit facility. The company has appointed Morgan Stanley and Moelis & Co to help advise it on strategic options.

Ratings agencies have cut their scores on the company further in the past month, expressing concern about the possibility Noble Group may not meet its obligations. S&P Global Ratings has said the trader's debt load is unsustainable given its current earnings path, and also flagged a risk of default.

New Noble Group Chairman Paul Brough, who's replaced founder Richard Elman in that role, is spearheading efforts to ensure the company survives. Mr Brough, a restructuring specialist who worked on the liquidation of Lehman Brothers Holdings Inc, has been detailed to lead a strategic review of the business.

BLOOMBERG