Noble Group wins lifeline as shareholders back $3.5 billion debt restructuring

By Anshuman Daga and Fathin Ungku

SINGAPORE (Reuters) - Noble Group Ltd (NOBG.SI) won approval from shareholders on Monday for a $3.5 billion (£2.72 billion) debt restructuring plan that should ensure the survival of what was once Asia's biggest commodity trader.

Faced with the prospect of the company's insolvency, shareholders reluctantly backed a debt-for-equity swap that will leave them owning just 20 percent of the business, while handing majority control to a group of creditors comprised mainly of hedge funds.

"It's obviously a relief to get this out of the way today and to get such a strong support from our shareholders," Noble Chairman Paul Brough told reporters after the company won approval from 99.6 percent of shareholders voting at Monday's 90-minute meeting in Singapore.

"It's all about the business now, rather than the restructuring," Brough said after fielding numerous questions about the restructured firm's prospects from the shareholders that packed the banquet hall where the meeting was held.

Several small shareholders attending the meeting told Reuters they were angry with Noble's management as the plan diluted the value of their investments, but said they saw no choice but to support the plan in order to save at least some of their money.

"We want to keep the company afloat rather than liquidate it," said Roger Ong, 49, a driver who invested in Noble shares.

Noble, founded in 1986 by Richard Elman, who took advantage of a commodities bull run to build it into one of the world's biggest traders, has had its market value all but wiped out from $6 billion in February 2015.

The crisis for the company started that month after Arnaud Vagner, a former employee, published reports anonymously under the name of Iceberg Research that accused Noble of inflating its assets. The upheaval triggered a share price collapse, credit downgrades, writedowns and asset sales.

Singapore-listed Noble has always stood by its accounts.

TRADE FINANCING LIFELINE

Under the debt-for-equity deal, the company's debt will be halved and it will get access to $800 million in trade finance and hedging facilities, a lifeline in a sector where profit margins are in the low single digits.

In return, Noble will hand over 70 percent of its restructured business to creditors, while existing shareholders' equity will be reduced to 20 percent and its management will get 10 percent.

The company's shareholders include sovereign wealth fund China Investment Corp, Abu Dhabi-based fund Goldilocks Investment Co Ltd and Eastspring Investments, as well as more than 30,000 retail investors.

Brough, a restructuring expert with more than 30 years of experience including the liquidation of Lehman Brothers' assets in Asia, said Noble would appoint a new chairman and board before the restructured company starts operations in two to three months.

Noble seeks to transform itself into an Asian-centric trader mainly dealing with coal, freight and liquefied natural gas. As part of its restructuring plan, the company has already moved its headquarters to London from Hong Kong.

Trading in Noble's shares were halted earlier on Monday pending an announcement.

In its glory days, Noble employed hundreds of traders, with ambitions to rival competitors like Glencore (GLEN.L) but it had to sell off prized assets, including its oil and gas units, to rivals Vitol and Mercuria.

Noble booked a $4.9 billion loss in 2017, despite a broad commodity market recovery, and then defaulted on its debt in March 2018.

Analysts say Noble still faces an uphill battle, with its losses widening to $128 million during the April to June quarter from $72 million in the first quarter.

"There's no evidence so far that the business is turning around," said Neel Gopalakrishnan, credit strategist at DBS Group. "Funding is the most important driver for this business and if a turnaround doesn't come, the company may find it difficult to retain funding lines."

Iceberg said Monday's vote would not stop securities holders from suing the individuals and organisations responsible for Noble's downturn.

(Reporting by Anshuman Daga and Fathin Ungku; Additional reporting by Henning Gloystein; Editing by Richard Pullin and Christian Schmollinger)