Noble skips coupon payment for bonds due 2022

Singapore

EMBATTLED commodities trader Noble Group, which recently proposed a debt restructuring plan, has failed to pay the coupon on its bonds due 2022.

Still, its shares rose 3.7 cents, or 28 per cent, to 17 Singapore cents on Monday as a group of its perpetual noteholders submitted a counter offer to the firm.

The coupon payment for its US$750 million notes maturing in March 2022 was due last week on March 9. In a filing to the Singapore Exchange (SGX) on Monday, Noble said that it has availed itself of a 30-day grace period and has "consulted extensively" with an ad hoc group of the company's senior creditors. It also took into consideration advice received from the group's legal and financial advisers.

"The board currently considers that the company is very close to reaching final terms with the ad hoc group in respect of a proposed restructuring of the group's unsecured liabilities," it said on Monday morning.

Noble's non-payment had been expected by some in the market after it unveiled its debt restructuring plan. Citigroup said in a note on Feb 1 that the Hong Kong-based firm was not likely to make payment on the coupon.

The group also has the coupon and principal for its 2018 bonds coming due on March 20. Citi said Noble isn't likely to repay these US$379 million (S$498 million) notes at par.

Individual investors holding these 2018 bonds are upset that they are being treated the same as other bondholders, and have said they plan to veto Noble's restructuring plan.

But it is not clear how much bargaining power they have, as these creditors are classified as a singular class with creditors for notes maturing in 2020 and 2022 as well as the revolving credit facility expiring this year, according to Noble's restructuring term sheet.

The SGX has directed Noble to appoint an independent financial adviser to assess its restructuring plan, which has also drawn ire from a major shareholder, Goldilocks Investment Company, as well as its perpetual bondholders.

On Monday, a group of Noble's perp holders proposed a four-year US$700 million committed trade finance facility at "considerably lower cost" than what Noble has struck with its senior unsecured creditors; the facility would be underwritten by the perp holders and Noble's existing trading counterparties, Bloomberg reported.

"The ad hoc group seeks fair treatment of its claims in the Noble restructuring process," according to the release from Pinpoint Asset Management, which represents the group. "The group believes the alternative facility provides Noble with the competitive funding costs it needs to be successful and maximises value for all stakeholders."

Under Noble's proposed restructuring plan, an ad hoc group of senior creditors will underwrite a three-year US$700 million trade facility, with participating creditors also earning a 5 per cent fee.

In a separate announcement on Monday morning, Noble also said that the company and its indirect wholly-owned subsidiary Core Integrity have entered into a memorandum of agreement with Bianca Corporation and Primerose Shipping Co to sell a Kamsarmax dry bulk carrier vessel for US$24 million.

Built in 2015, the vessel, Ocean Integrity, is registered in Hong Kong and has a capacity of 81,499 deadweight tonnes. The vessel is used to service external customers as well as Noble Group's internal freight needs.

As at Dec 31, 2017, the book value of the vessel was about US$23.5 million. As such, the gain on disposal would be about US$0.5 million.

Two valuations of the vessel were recently commissioned by Noble Group on Feb 1. Arrow Valuations and Clarkson Valuations both valued the vessel at US$24 million.

The net loss (before income tax, minority interests and extraordinary items) attributable to the vessel, based on Noble's FY2017 results, is about US$2 million, the group said.

"Noble Group has decided to avail itself of favourable market conditions to monetise the vessel," the group said. "The proposed disposal will not significantly impact the operations of Noble Group's freight business."

The vessel is currently mortgaged to a financial institution and part of the proceeds will be used to pay down the relevant facility.

The net proceeds of US$7.3 million, after the repayment and deducting transaction costs, will form part of the assets of "Asset Co" - a new company to arise from Noble's proposed financial restructuring that will comprise palm oil plantations and alumina plant Jamalco, among others.

The cancelling date for the delivery of the vessel is April 16.