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Noble is said to move toward debt-for-equity restructuring

Bloomberg Published on Wed, Dec 13, 2017 / 3:14 PM GMT+8

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(Dec 13): Noble Group is talking to creditors about a conventional restructuring that includes a debt-for-equity swap, according to people familiar with the negotiations, a move that represents a change of tack as the commodities trader fights for survival. The shares extended their surge.

After meetings in Hong Kong last week, the company is expecting a proposal from its creditors to restructure US$3.5 billion ($4.7 billion) in debt, including a major debt-for-equity element, the people said, asking not to be identified discussing private talks. Depending on its size, the swap could wipe out a significant portion of the shareholdings of current investors.

Although a deal is some way off, this is a departure from Noble’s original proposal, which involved exchanging current debt, including bonds and a revolving credit facility, for new maturities without a haircut on the face value and initially preserving all the equity of the current owners. In that plan, the new debt would have come in three types: bonds supported by cash flows from Noble Group’s Asian coal and iron ore business, an asset-backed bond secured against other physical assets, and a mandatory convertible bond.