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Noble restructuring in doubt as founder Elman said to push for new deal
[LONDON] Richard Elman, the founder and largest shareholder of Noble Group Ltd, is pushing the embattled commodities trader's creditors for a new restructuring deal, according to people familiar with the matter, casting fresh doubt on the survival of the company.
Noble needs the support of at least half of the shareholders that vote in a special meeting for a US$3.5 billion debt-for-equity restructuring plan that will all but wipe out exiting equity investors. If shareholders reject the plan, the company plans to file for insolvency in London.
Mr Elman, who resigned from the board last month due to "differences of opinion" with the firm's directors and creditors over its future, is pushing to increase the stake that current shareholders will get in Noble immediately after the restructuring to 15 per cent to 20 per cent, up from 10 per cent under the current deal, the people said, asking not to be named discussing private conversations.
The 77-year-old British executive also wants a say in the company's future, potentially including a seat on the board, one of the people said.
Mr Elman is pushing for a better deal for himself and others days after the Singapore's stock market regulator criticised the restructuring plan and asked creditors to reconsider some of its proposals.
Noble said on Monday that it's "in discussions with shareholders and the SGX on the restructuring".
The company declined to elaborate further. It's unclear whether Mr Elman is talking to creditors via the company or directly.
Noble had been planning to seek irrevocable undertakings from shareholders to support the deal in mid to late March, according to a presentation published March 14. It has yet to announce any irrevocable shareholder undertakings.
The company has long said it would prefer to secure shareholder approval for the deal rather than complete the restructuring via an insolvency and administration process in the UK that could damage its commercial relations. As such, shareholders may have some leverage to convince management and the creditors to re-open the deal.
However, changing the share allocation under the restructuring deal may require the company to reopen discussions with its senior creditors, of which 70 per cent have already agreed to the current deal, according to a company announcement on Monday.
Mr Elman last month trimmed his stake in Noble from 18.07 per cent to 17.94 per cent. The sale was small but symbolic: Mr Elman, who started Noble with US$100,000 of his savings in 1986 in Hong Kong and grew it to a US$10 billion giant at one point, sold shares only once previously in the company's history, he testified in a court case last year.
The two representatives of China Investment Corp (CIC) on Noble's board have also stepped down, suggesting that Beijing has misgivings about the restructuring plan. The sovereign wealth fund is the second-largest shareholder in Noble, with a 9.5 per cent stake worth only US$6 million at current prices. CIC paid US$850 million for its initial investment in Noble in 2009.
The third-largest shareholder in Noble is already opposed to the restructuring plan. Goldilocks Investment Co, an Abu Dhabi-based fund, controls 8.1 per cent of Noble. Together, the top five shareholders in Noble, which besides Mr Elman, CIC and Goldilocks, include Orbis Allan Gray Ltd and Prudential Plc, control 48.5 per cent of the shares.