Singapore trader and bulker owner Noble Group is making a last-ditch court bid to save its huge $3.5bn debt restructuring - and warned that liquidation looms if it fails.
Last week, the company was blocked from transferring its listing status to a new company (New Noble).
The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX Regco) said there were “significant uncertainties” about the financial position of New Noble.
Noble has now responded by saying it intends to make an application to the Bermuda court to appoint a court officer "in order to implement the restructuring in accordance with the terms of the schemes for the benefit of all of its stakeholders."
Day-to-day operations of the group will be unaffected and it expects to seal the deal on 18 December, assuming the court order is obtained at a 14 December hearing.
It has secured extensions to the English scheme and the Bermuda scheme to 31 December.
The court move has been made after having consulted with its advisers and key stakeholders, including the ad hoc group of creditors, Noble said.
The only course of action left
Noble said it believes this course of action to be the only means available to it to implement the restructuring in the interests of all stakeholders.
"Existing shareholders of the company will continue to be allocated a 20% interest in New Noble in this approach (despite the fact that the listing status of the company will not be transferred to New Noble)," it added.
"This approach is intended to preserve the underlying business and operations for the benefit of its stakeholders. Existing shareholders of the company would still receive the New Noble shares to be allocated to them and therefore will continue to participate in any potential recovery upside.
"In the event that the company is unable for any reason to complete the restructuring in accordance with this approach, the company would be forced to enter into a full liquidation process."
This would wipe out shareholders and holders of perpetual capital securities, and also lead to a "materially lesser" recovery for creditors.
MAS, SGX and the Singapore Police Force said in a joint statement last week: “It would be imprudent to allow the re-listing as investors will not be able to trade in New Noble’s shares on an informed basis.”
The announcement came after a “careful review” of the findings thus far into Noble Group and Noble Resources International (NRI), carried out by MAS, the Commercial Affairs Department (CAD) and the Accounting and Corporate Regulatory Authority (ACRA).
Last month, the authorities took investors by surprise when it revealed that the commodities trader was being probed for potential breaches of securities rules and company law.
Noble Group last week warned it may seek court-appointed administration in the UK after Singapore authorities blocked its relisting plans.
Vital debt deal
The company has been 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.
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.
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%.
