Noble Group Ltd., the commodity trader that’s seeking to restructure its debt, said it expects to report a net loss of between $1.73 billion and $1.93 billion for the final quarter of last year, potentially bringing losses for all 2017 to almost $5 billion.

For now, given talks with creditors and finance provided by its banks, “the board is, on balance and on the basis of legal advice, satisfied that the group can continue as a going concern, until such time as the restructuring is completed,” the Hong Kong-based company said in a statement on Monday.

Noble Group announced the deal to restructure $3.5 billion in debt last month, averting bankruptcy after a three-year crisis marked by losses, writedowns and controversial accounting. Since the plan was unveiled, the proposal has drawn fire from one of its top shareholders, as well as some bondholders. The company said the discussions on the proposal continue to be productive.

The expected loss for the fourth quarter “results in a negative net-asset position for the group in the range of $650 million to $850 million at Dec. 31 2017,” it said. “However, the board believes that the proposed restructuring, once implemented, should restore shareholders’ equity and create a sustainable capital structure which will allow the group to rebuild its business in Asia where it continues to enjoy a market-leading position.”

For the full year, the net loss is seen between $4.78 billion and $4.98 billion. Of the expected loss for the fourth quarter, $50 million to $100 million was made on continuing operations in hard commodities, freight and LNG, and a further $225 million to $275 million was in energy businesses it’s sold, the company said. There was a further exceptional loss of $1.45 billion to $1.55 billion, including non-cash mark-to-market losses on derivatives positions.

Under the rescue plan, which has been backed by some creditors, the agreement will see about half of the debt, including bonds, switched into new equity, with perpetual bondholders offered a few cents on the dollar. All existing shareholders will get a 10 percent stake in the revamped company.

Noble Group said the ad hoc group of creditors that it’s in talks with over the debt plan controls 36 percent of its senior debt -- obligations that include bonds due in 2018, 2020 and 2022 as well as credit facilities. In addition, the ad hoc group’s advisors are in talks with holders of a further 15 percent of the senior debt, who “have indicated their broad support” for a restructuring.

As part of the proposed restructuring, Noble Group has reached an agreement in principle with the creditors’ group and ING Groep NV, as fronting bank, for a three-year $700 million trade-finance facility. The facility is to be made available when the restructuring is effective, it said.

Source:
courtesy of BLOOMBERG

by Jake Lloyd-Smith

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