Noble runs into creditor trouble over restructuring deal

Some perpetual bondholders in the UK filed a lawsuit against the company.

Noble Group suspended its shares before making an announcement, as its dreams to get shareholder agreement on its US$3.5b debt restructuring plan appears far from reach than initially expected. 

Bloomberg reports that Pinpoint Asset Management Ltd. and Value Partners Ltd. have filed a claim against Noble Group in a UK court, according to an online search of cases there, which gave no further details. Pinpoint Asset Management is part of a group of perpetual bondholders, which was said in May to be close to a debt workout agreement with the trader.

Noble Group’s perpetual bonds fell 2.3 cents to 7.3 cents on the dollar by 10:40 a.m. on Monday and headed for the biggest one-day decline since January. Meanwhile, its defaulted 2018 notes climbed 0.9% to 40.2 cents on the dollar, recouping part of the 2.7-cent drop on Friday.

The stock fell to a record low of 5 cents last week before closing at 5.4 cents on Thursday. Its market value shrank from over US$10b in 2010 to just about US$50m.

It is struggling to pass a rescue deal that will swap half the debt for equity and hand control to creditors. The company’s original plan was to complete the restructuring by July.

Whilst the plan has been backed by some 85% of senior creditors, as well as founder and largest shareholder Richard Elman, it’s run into fierce opposition from one of its top shareholders Goldilocks. The Abu Dhabi-based investment fund has sued the trader, as well as the banks and hedge funds supporting the proposal, to halt the restructuring.

Brough told analysts during the first quarter earnings call that he would be “quite happy” if the company could issue the circular by the end of May.

Read Bloomberg's full report here.