Noble's creditors not its economic owners, and liquidation not the only other option: Goldilocks

Singapore

GOLDILOCKS Investment Company on Thursday rubbished Noble Group's argument that its senior creditors are its economic owners, and that liquidation is the only way out if the group's primary restructuring plan fails and there is no alternative restructuring plan.

The commodity trading group also has not explained why an administration process in the UK would be better than judicial management in Singapore where Noble has real connections and investors, the Abu Dhabi fund also said.

"It is entirely inappropriate for the board to use Noble's liquidation value as a basis to prematurely conclude that, at this time, the senior creditors are the sole economic owners of Noble," said Goldilocks in a statement, pointing out that this is inconsistent with the group's position that Noble is able to continue as a going concern until the restructuring is complete.

The investment firm added that Noble's intent in doing so is twofold: to threaten and oppress shareholders, and to push through the restructuring support agreement (RSA) that has been negotiated with a small number of creditors.

Goldilocks, which owns a 8.1 per cent stake in Noble, has become the group's third largest shareholder after other major shareholders, Prudential and Orbis, pared their stakes in recent weeks.

Noble had said in a March 26 announcement that its restructuring is fair and equitable to shareholders on the basis that senior creditors are the economic owners of Noble in a liquidation scenario.

Goldilocks said that, contrary to what Noble's board is claiming, alternatives to restructuring contemplated under the RSA are not limited to liquidation.

"White knight and refinancing proposals have been put forward to the board, and the board has rejected them, without providing any details or reasons."

Goldilocks also criticised the alternative restructuring plan proposed by Noble's board - which would be implemented if the primary restructuring plan is approved by the required number of creditors but not by shareholders - as an "artificial process" in which the primary goal is to "wipe out those shareholders who oppose the RSA plan".

Furthermore, Noble's board has not provided adequate justification that an administration process in England, through which the alternative restructuring would take place, would be better than judicial management in Singapore where Noble's bonds are listed.

Doing so in England, in contrast, requires the board to shift Noble's centre of main interest "to support the legal artifice it is trying to create", it added. This move, along with Noble's alternative restructuring, "are designed to deprive shareholders of their lawful rights and are not achievable in the current circumstances".

The investment firm also reiterated its unhappiness with Noble's existing management receiving a stake in the new company and their release from any liability, as well as their entitlement to an interest-free loan from senior creditors to subscribe for a further 10 per cent stake in new Noble.

"Again, there is no justification and this begs the question why the senior creditors are being so generous (as so called economic owners) to existing management," wrote Goldilocks.

"This question demands an immediate response from the senior creditors," it added, calling for Noble to also provide full details of the identity and holdings of the senior creditors who have committed to the RSA.

Noble said on Wednesday that support for the deal has risen to 55 per cent of its creditors, from 46 per cent on March 14. The RSA requires approval by a majority of existing senior creditors representing 75 per cent in value of its debt.

Goldilocks said details of these creditors are "highly relevant" given that Noble has defaulted on its 2018 bonds, and holders of 25 per cent of these bonds could institute proceedings against Noble through the trustee.

A external spokeswoman for Noble said it will not be commenting on Goldilocks' statement. "Our statement earlier this week contained all of the relevant information," she said.

The company separately announced on Thursday night that PT Atlas Resources has filed a lawsuit in Indonesia against the company, seeking compensation for more than US$260 million. An advertisement with a brief description of the claim was published on Thursday in The Jakarta Post. Noble said it has not been served any writ over such claim, and said the lawsuit is "completely frivolous and vexatious".

"It appears that the lawsuit in Indonesia has been filed as a response to earlier actions and positions taken by the company's subsidiaries against PT Atlas Resources in arbitration proceedings in Singapore for non-performance," Noble said. "For reasons of confidentiality, the company is unable to disclose any further details of the arbitration proceedings."

Shares in Noble rose 0.1 cent or 1.3 per cent to 7.8 Singapore cents on Thursday.