Business

Noble shareholders back US$3.5 bn deal in fight for survival

Wednesday, August 29, 2018

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SINGAPORE (AFP) — Commodities trader Noble Group's shareholders backed a US$3.5-billion restructuring deal on Monday, in a major boost for the embattled company's efforts to stay afloat.

The deal is aimed at pulling the company back from the abyss of a three-year crisis sparked by a fall in commodity prices, allegations of irregular accounting practices, and a ratings downgrade.

Once one of the world's top commodity-trading houses, Noble has been reduced to a shell of its former self as the company sold off assets while battling creditors and shareholders in a bid to survive.

Shareholders overwhelmingly backed the plan, which calls for 70 per cent of the restructured company to be held by creditors, with 20 per cent going to shareholders and 10 per cent to management.

The vote went ahead after key investor Goldilocks Investment Co in June agreed to a revised restructuring plan that raised shareholders' equity in the company from 15 per cent.

Abu Dhabi Financial Group, with which Goldilocks is affiliated, will also form a strategic partnership with Noble to explore opportunities in the Middle East.

“We are now moving into the final phase of the restructuring,” Noble Chairman Paul Brough told investors before the vote. According to Noble, which is headquartered in Hong Kong and listed in Singapore, it saw its market value plunge from US$6.0 billion in February 2015 to just $114 million currently after being accused of inflating its assets through irregular accounting practices.

The allegations marked the start of the crisis that has engulfed the company.

Monday's deal still needs a formal endorsement by senior creditors — which it is likely to get — and approval from the courts but this could run into a roadblock as a legal challenge is planned, according to Bloomberg.

Noble, however, said it is aiming for completion of the deal by year-end, Bloomberg said.

Founded in 1986 by British businessman Richard Elman, Noble rode the crest of a rise in commodities prices to become one of the world's biggest commodity-trading houses.

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