For Abu Dhabi-based Goldilocks, Noble's debt restructuring plan is just not right

It warned Noble's losses will erode the little cash it has left.

Abu Dhabi-based Goldilocks, one of the top shareholders of Noble Group Limited (NGL), piles the pressure on the struggling commodities trader after it warned other shareholders to reject the company’s debt restructuring plan. The fund currently owns 8.1% of NGL.

Noble previously warned of a loss around the range of US$4.78b to US$4.98b in 2017. It expects significant non-cash losses of US$1.45b to US$1.55b mainly from its mark to market (MTM) derivatives portfolio. It also warned of a US$50m to US$100m loss from its Hard Commodities, Freight and LNG operations.

“These figures are extremely shocking,” Goldilocks said in a statement. “More importantly, the timing of the release (less than 1 month after the announcement of Noble’s proposed restructuring plan) leads one to suspect that Noble’s management may be deliberately releasing ‘exceptional’ losses to pressure stakeholders to approve the only turnaround proposal on the table. A proposal which aims to give Noble’s management up to 20% shareholding in the restructured company.”

Goldilocks noted that the non-cash net losses of US$1.45b to US$1.55b represent a 50% increases of NGL’s cumulative US$3.05b net losses, which were already booked in the company’s financial statement for the nine months ended 30 September 2017. “These additional huge MTM and impairment losses would mean that the total net losses for the full 2017 financial year would balloon to a gargantuan US$4.975b, stripping Noble’s economic value to negative territory.”

“The profit warning indicates that Noble’s remaining core business is still hemorrhaging cash,” Goldilocks said. “The anticipated adjusted 4Q2017 net loss in the range of US$50m to US$100m from its continuing businesses in Hard Commodities, Freight and LNG operations is a reflection of Noble’s state of affairs. These net losses will also erode what little cash Noble has left and puts further pressure on stakeholders to accept the restructuring proposal. Why should this same management that had created Noble’s present debacle be rewarded, let alone so richly?”

“We urge all stakeholders (shareholders and creditors) to join Goldilocks in opposing the proposed restructuring and work together for a more equitable and meaningful turnaround for all,” the fund concluded.