May 16, 2018 / 2:00 AM / 2 months ago

RPT-EXPLAINER-From $11 bln trading titan to penny stock: Noble Group faces crunch as creditors, investors circle

(Repeats story from Tuesday with no changes to text)

* Noble seeks $3.4 bln debt restructuring to survive

* Dissident shareholder files lawsuit to prevent deal

* Market value falls from more than $11 bln to just $80 mln

By Anshuman Daga and Henning Gloystein

SINGAPORE, May 15 (Reuters) - Just seven years ago, Noble Group was an $11 billion-plus Asian commodity powerhouse, trading everything from soybeans to oil. Now it’s worth barely $80 million, rooted among Singapore’s penny stocks.

Noble has posted huge losses provoked by a lack of trade financing and market calls that went sour, while also whittling down a mountain of debt. On Tuesday, it reported a narrower first-quarter loss than a year ago, although saying its performance was still beset by constraints on liquidity and trade finance.

Shareholder meetings and legal rulings over the next few weeks will decide whether it survives.

Amid accusations of false accounting levelled in 2015 by Iceberg Research, and a legal spat this year, a long slide in investor confidence has seen most of Noble’s market value wiped out. Noble has defended its accounting and is now trying to clinch a last-ditch deal with creditors and shareholders from which - if it succeeds - it will emerge a transformed company.

Noble is seeking approval to halve its $3.4 billion debt in return for handing over 70 percent of equity to senior creditors, mostly a group of hedge funds which calls itself the “Ad Hoc Group”. Under that plan, its headquarters will be in London, not Asia, no longer controlled by founder Richard Elman.

The deal would leave existing shareholders with just 15 percent equity in a company that has seen its share price fall from a peak of S$17.6 Singapore dollar ($13.18) in 2011 to below S$0.1.

Despite its woes, Noble has so far defied talk of its demise. But to keep going, Noble needs a majority of its shareholders to approve the restructuring - a vote on the proposal is expected in June.

GOLDILOCKS, BEARS

Scared by the prospect of total loss and lack of any alternate plan, the proposal could get enough support, company sources say.

Founder Elman, still Noble’s biggest shareholder with a stake of nearly 18 percent, would be given a board seat in the new firm.

Noble chairman Paul Brough, a restructuring and liquidation expert, has urged shareholders to support the deal, threatening a failure would result in insolvency and bankruptcy.

But leading the resistance is Abu Dhabi-based Goldilocks Investment Co. Ltd, which holds 8.1 percent in Noble. Goldilocks has filed complaints and lawsuits against the restructuring plans, arguing they protect creditors at the expense of shareholders.

Goldilocks is Noble’s third-biggest shareholder after Elman and China Investment Corp, which has a 9.5 percent stake.

It’s not just shareholders who are unhappy, though.

One of Noble’s business partners, Indonesian coal miner PT Atlas Resources, has also filed lawsuit against Noble and its chief executive William James Randall, alleging it was given false information related to asset sales.

Shipping Indonesian coal to buyers in Asia is the biggest remaining business at Noble, which has said it plans to resist any and all allegations or claims made against it.

‘NIMBLE AND MOTIVATED’

In its glory days, Noble employed hundreds of traders, with ambitions to rival global rivals like Glencore.

But with its market value a shadow of what it once was, and billions in debt, Noble has struggled to remain active. Instead of trading itself out of trouble, it was forced to sell off its core businesses, including oil and gas, to competitors Vitol and Mercuria.

This, as well as some bad trading calls, meant Noble booked a whopping $5 billion loss in 2017 - despite a broad commodity market recovery.

As a result, Noble was unable to join a share-price rally enjoyed by rival miners and traders like Glencore or Whitehaven Coal.

For now, Noble fights on, seeking to make the best of its new look.

Earlier in May, its gave a market presentation at a major coal trading event in Bali at which it described itself as “small, but nimble and motivated”. ($1 = 1.3352 Singapore dollars)

Reporting by Anshuman Daga and Henning Gloystein; Editing by Kenneth Maxwell and Tom Hogue

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