Noble Group is seeking to pursue its debt restructuring via a Bermudan court, using a local kind of insolvency process, after a key element of its survival plan was blocked by Singapore authorities.
The embattled commodity trader will apply for a Dec. 14 hearing in Bermuda to allow its reorganization through a court-appointed officer, it said in a statement on Tuesday. That means installing a so-called provisional liquidator, according to people familiar with the matter, who the company hopes would implement its “plan B” restructuring.
It’s the latest development in a long-running saga, in which Singapore regulators got involved last month by announcing a probe into the company’s accounts. They followed up by halting a relisting of its shares in the city-state, effectively blocking a $3.5 billion restructuring plan. Once Asia’s largest commodity trader, Noble has been reduced to a rump by billions of dollars in losses and writedowns as well as accusations of inflated profits, which were first made by Iceberg Research in 2015.
Noble Group said last week that it intended to push through its mammoth debt-for-equity restructuring by an “alternative process” that may include a court-appointed officer. The company was considering a “pre-pack” administration, a procedure that allows for a restructuring in court through a pre-agreed plan with creditors, according to a person familiar with the matter.
Alternative Plan
In August, Noble said in a circular that if its first choice failed, the alternative restructuring would involve filing for administration in the U.K. Under that scenario, creditors would aim to swiftly take control of assets and existing shareholders and perpetual bondholders could be wiped out. That also risks triggering clauses allowing some counterparties to walk away from supply contracts, making it harder for Noble to stay in business.
Noble said on Tuesday that its day-to-day operations are unaffected, trade finance facilities will continue to be available and payments to customers and suppliers will be made as usual. The court will appoint an officer to Noble Group only and not to any of its subsidiaries. The effective restructuring date is now expected to be Dec. 18, assuming the court approves it, according to the company.
The company said that current shareholders of Noble would still receive shares in the restructured entity should the plan B restructuring go ahead. Still, it’s not clear how easy it will be for them to be traded as they wouldn’t be listed.
Noble also warned that should the plan B fail, it would be “forced to enter into a full liquidation process”, which would entirely wipe out shareholders and perpetual bondholders, as well as imposing hefty losses on other creditors.
In November, just days before the company was due to complete its reorganization, a trio of Singaporean authorities said they were probing whether Noble made false accounting declarations. Last week, authorities said Noble can’t relist as a new entity in Singapore and that there were “ significant uncertainties about the financial position of New Noble”.