Update: Noble sells 49% stake in agri unit to China firm for US$750m

Published Wed, Dec 23, 2015 · 12:24 AM

NOBLE Group successfully concluded on Wednesday the terms for the disposal of its remaining 49 per cent stake in its agricultural unit to COFCO International Limited for US$750 million, with the possibility of an additional US$200 million from future value creation by the unit.

The entire proceeds of the disposal of Noble Agri to Chinese state-owned food processing company COFCO will be used to pay down debt, Noble said in filings to the Singapore Exchange before markets opened on Wednesday.

The sale of this unit will also provide corporate guarantee which had previously supported Noble Agri's borrowing, wrote the company. This will release a liability which had affected ratings of the company's accounts.

The divestment of Noble Agri and the 2012 merger of Gloucester Coal with Yancoal over the last four years will help Noble receive in excess of US$4 billion in cash. This would help it transit to an asset light business model, said Noble.

"After completion of this transaction, Noble Group's financial metrics will be well in excess of those required of an investment grade credit," it wrote.

"The transaction also ensures that the group has comfortably exceeded its commitment, which was made six weeks ago, at the time of its Q3 2015 results announcement, to generate in excess of US$500 million from asset disposals and/or other strategic/financial transactions."

Noble's net debt as at end-September 2015, after adjustment for readily marketable inventories and after incorporating the proceeds of the transaction, would have been, on a pro forma basis, US$1.8 billion.

Cash on hand as at that date would have been US$2 billion and liquidity headroom would have been US$2.7 billion.

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