November 9, 2017 / 12:54 AM / 2 years ago

Noble Group's debt plans in focus as company set to report big loss

HONG KONG/SINGAPORE, Nov 9 (Reuters) - Noble Group’s strategy to service its debt and turn around its businesses will be in the spotlight on Thursday as the commodities trader prepares to unveil a massive quarterly loss, hit by one-time charges. The Singapore-listed company, once among the world’s biggest traders, is shrinking to an Asian-centric firm focused mainly on coal and LNG, after slashing jobs and selling assets to cut debt and emerge from two years of crisis.

Last month, Noble said it would get about $580 million for the sale of its Americas-focused oil trading business and smaller gas and power unit. It also flagged a total net loss of up to $1.1 billion for July-September.

The focus now is on whether Noble has enough credit lines to run its businesses.

“We would look at the liquidity headroom which shrank in the last quarter. Also, we would like to see its operating cash flow and working capital situation,” said Danny Huang, analyst at S&P Global which has a CCC-minus rating on Noble.

S&P said last month that Noble remained at risk of defaulting within the next six months.

Noble faces major debt repayments early next year amid concerns that its existing operations and resources are insufficient to service its $2.6 billion debt.

Investors are also keen to know how Noble’s negotiations with its lenders are progressing. Some banks have waived the company’s loan covenants by a few months.

“I am very surprised new management hasn’t attempted to negotiate with bondholders yet to pick up some security in exchange for a large reduction in principal,” said Andy DeVries, analyst at CreditSights.

“I guess their first priority was this asset sale and dealing with the banks.”

In June, Noble deferred payment on a $400 million perpetual bond, triggering concerns over other debt payments. However, it has discharged its other debt obligations since the skipped coupon.

Hong Kong-based Noble was plunged into crisis in February 2015 when Iceberg Research questioned its accounts, and then it was hit by a commodities downturn.

While Noble stood by its accounts, the crisis triggered a share price collapse, credit downgrades, writedowns, as well as fund-raising and management changes. Its market value has fallen to less than $400 million from $6 billion in February 2015. (Reporting by Umesh Desai and Anshuman Daga; Editing by Sumeet Chatterjee and Stephen Coates)

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