Noble Group chairman urges shareholders to OK restructuring proposal

By Caroline Salls

Pittsburgh, April 18 – Noble Group Ltd. chairman Paul Brough wrote a letter to stakeholders “to address and clarify certain matters pertaining to the company’s proposed restructuring,” according to a news release.

As previously reported, the restructuring will be implemented in accordance with a March 14 support agreement.

In the letter, Brough said Noble has defaulted on $3.4 billion of its financial debt obligations.

“Given this, the company can only survive with the support of its creditors,” the letter said.

“The restructuring support agreement with an informal group of Noble creditors calls for a write down of $1.8 billion of senior debt.”

Brough said that currently, senior creditors representing roughly 83% of the company’s existing senior claims have signed the support agreement.

To ensure a consensual restructuring, the chairman said the company also needs shareholder support. “Contrary to what has been stated by certain parties, given the defaults, the alternatives facing the company are ... very stark and unattractive for stakeholders,” the letter said.

Insolvency proceeding possible

If the creditors of the company do not continue to support the company as they have to date, the board was advised that it would be necessary to enter a formal insolvency or bankruptcy process.

“If this happens, decisions over the future of the company will be taken out of the board’s hands and placed in the hands of a court-appointed officer.”

Because the value of Noble’s assets in a liquidation scenario are significantly lower than its debt, Brough said “shareholders and holders of the company’s perpetual capital securities will receive nothing” in insolvency proceedings.

In addition, Brough said the informal creditor group’s willingness to continue to support a consensual restructuring could be affected by the shareholders taking action “that is or could reasonably be expected to be, damaging to the business.”

As a result, the chairman said the creditor group “stands ready to protect its interests and move forward with a restructuring via an alternative implementation route, which would see shareholders receiving no return on their investment.”

Support agreement change

Brough said the company proposed that, if more than half of the shareholders vote against the restructuring at a special general meeting, those shareholders who did vote in favor of the restructuring “would receive the same economic interest in New Noble under the alternative restructuring as if the resolution for the restructuring had been carried.”

However, Brough said SGX said in an April 5 regulatory announcement that “shareholders should have the freedom of choice in voting on the restructuring; and how a shareholder votes on the restructuring should not have a bearing on whether he/she would be entitled to receive shares in New Noble under the alternative restructuring provision.”

“SGX also urged senior creditors to reconsider the alternative restructuring provision to ensure parity in the treatment of all shareholders,” the letter said.

As a result, Brough said Noble will amend the support agreement “so as not to pursue the alternative restructuring provision ... as to enable shareholder freedom of choice in voting on the restructuring.”

If more than half of the shareholders vote against the restructuring, Brough said it is likely that Noble will enter into a formal insolvency or bankruptcy process.

“In such a situation, the future of the company, including the allocation of shares in New Noble, will, regardless of whether or not the alternative restructuring provision is included in the RSA, be in the hands of the appointee,” according to the letter.

Undertaking

Brough said Noble received an irrevocable undertaking on April 16 from Noble Holdings Ltd. to support the restructuring with its entire 17.9% shareholding.

The chairman said the proposed restructuring provides an economic return for all stakeholders, and it currently provides Noble with a $700 million committed trade finance facility, which is needed for the business to operate.

Noble Group is a Hong Kong-based conglomerate that focuses on raw materials.

© 2015 Prospect News.
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