A UK chancery court ruling has revealed varying levels of likely returns for Noble Group creditors, as claims look set to rise.
Justice Richard Snowden set out details of the Singapore trader and bulker owner's restructuring scheme as he gave reasons for agreeing to convene meetings with creditors.
It has previously been reported that the company is seeking to reorganise debt of $3.5bn, but other claims could push this to $4.2bn.
Noble's bond and bank debt has fallen into default and it has been selling some of its dry cargo fleet in the past year.
All scheme creditors will be entitled to a proportion of $290m of bonds to be issued by an intermediate holding company of a successor entity called New Noble, 70%-controlled by creditors, Snowden said.
These will be subordinated to $1.2795bn of new "priority" bonds which will be issued by New Noble itself.
Crucially, however, the priority debt will only be issued to scheme creditors who elect to “risk participate” by agreeing to guarantee $700m of new trade finance and hedging facilities, the ruling said.
Big effect on claims
This will have a "very significant" effect on the likely returns, Snowden said.
Investment bank Moelis has calculated that a non-participating creditor can expect to receive between 24.7% and 33.8% of its accepted claim, whereas a creditor who guarantees new finance will get between 47.4% and 58.4% for a risk participation of between 14.7% and 18.2%.
An analysis conducted by KPMG with an assumed liquidation date of 31 March this year estimated that returns to unsecured creditors would range between 19.5 and 30.3 cents in the US dollar.
The finance creditors’ claims total about $3.5bn: $1.143bn from a revolving credit facility and $2.3bn from unsecured notes.
The amount of other scheme claims is uncertain, but Moelis assumed they might total either $100m, $200m or $800m.
The latter two figures are described as “unlikely” and “highly unlikely” respectively, however.
PT Atlas Resources has threatened to bring a claim in Indonesia for around $260m against 17 defendants including the company and one of its directors.
The claim is said to relate to coal mining interests in Indonesia in response to arbitration proceedings commenced by a Noble Group subsidiary in Singapore, but after seven and a half months the company has yet to be served with any proceedings.
Vitol claim has money set aside
Trader and shipowner Vitol is a potential creditor of the company under an indemnity given to it when it purchased Noble Americas Corp from the group in January 2018.
Vitol has not made any claims under the indemnity, but were it to do so, it is expected that they would be satisfied from a sum of about $105m which is being held in an escrow account for the purpose.
And COFCO Agri will have a claim of $102.67m plus interest in a settled arbitration case arising from Noble's disposal of its stake in Noble Agri Limited in 2014.
The existence and value of the remaining other scheme claims, except for COFCO, are likely to be subject to considerable dispute, Snowden said.
There is a 27 November deadline for completion of the restructuring imposed by the Securities Industry Council of Singapore.
Noble intends to seek recognition of the English scheme in the US, where it has filed for Chapter 15 protection.
The suggested date for the scheme meetings was Thursday 8 November.
Noble has also booked a hearing to sanction the scheme in England on 13 November.
Other debt "under water?"
Existing shareholders and management will have 20% and 10% of New Noble respectively.
The scheme does not extend to the holders of perpetual capital securities on which $436m in principal and interest is due.
It is said that these instruments would be “under water” and would not receive a return in a liquidation of the group.
Holders will however be offered the opportunity to exchange their existing debt for $25m of new instruments to be issued by New Noble.
The scheme also excludes certain other claims and does not extend to one major financial creditor of the company, ING Bank, which has entered into its own agreements with Noble.
