Commodity trader Noble Group currently experiences a very crucial shareholders’ meeting today (August 27) as investors will vote on a US$3.5 billion debt restructuring plan that its creditors and board consider vital to prevent insolvency.
The once global company, has shrunk to an Asian-centric business focusing on coal and freight trading after it cut hundreds of jobs and sold prized assets to reduce debt.
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Noble will probably win the necessary majority of voters at the meeting, Reuters reported. Noble has already gained majority support from its creditors as well as backing of 30% of its shareholders.
Namely, Noble plans to reduce to half its debt after giving 70% of control to its senior creditors, while shareholders’ stakes will reduce to 20% and its management would receive 10%.
Noble experienced many problems in February 2015 when an ex-employee, Arnaud Vagner, published reports anonymously, claiming that Noble inflated the prices of derivative contracts in order to appear more profitable.
After these allegations, Noble’s shares and bonds plummeted, as the company lost its investment-grade rating, took billions of dollars in impairment losses and lost access to funding, while it changed its chief executive officers as well.
In attempt to reduce its debt, Noble sold a number of assets but this was not enough to run a trading business. In fact, the company posted a record US$4.9 billion loss for 2018 and then defaulted on its debt in March.
Earlier this year, in June 2018 the restructuring plan started gaining ground, as the company won a key shareholder with a sweetened offer.
However, if Noble does not get shareholders’ approval, it will seek to use a similar restructuring to keep the firm as a going concern. Nevertheless, with this plan shareholders will not to receive any equity in the new company.
