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Abu Dhabi, UAESaturday 15 December 2018

Noble eyes debt restructure as it warns of $1.9bn loss

Commodities trader expects quarterly net loss would result in a negative net asset position for the group

Noble Group headquarters in Hong Kong March. Bobby Yip/Reuters
Noble Group headquarters in Hong Kong March. Bobby Yip/Reuters

Commodities trader Noble Group warned it faced a fourth-quarter net loss of up to $1.9 billion, citing challenging operating conditions, and said it was making progress on its restructuring talks for a debt-to-equity swap.

"Operating conditions continued to be challenging in 4Q 2017 as the group continued to manage the business within existing constraints in trade finance and liquidity availability," Noble said on Monday.

Last month, Noble announced a deal with creditors to restructure $3.5bn of its debt for 70 per cent of the company, with existing equity holders' combined stake diluted to only 10 percent.

This followed three tumultuous years in which the Hong Kong-headquartered company cut jobs and sold assets, some at losses, taking massive writedowns and raising funds.

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Noble expects a total net loss of $1.7bn to $1.9bn for the quarter ending December 2017, stemming largely from non-cash losses from its mark-to-market derivatives portfolio, and an annual loss of $4.7bn to $4.9bn.

It warned that the expected quarterly net loss would result in a negative net asset position for the group, but said the board "believes that the proposed restructuring, once implemented, should restore shareholders' equity and create a sustainable capital structure..."

Noble said a group of senior creditors with whom it was discussing its restructuring, called the "Ad Hoc Group", held about 36 per cent of the company's senior bonds and loans.

The Ad Hoc Group's advisers were in contact with creditors who held about an additional 15 per cent of Noble's senior debt instruments and had indicated their broad support for a restructuring.