Noble clears hurdles in rocky restructuring, as Goldilocks drops objections

Singapore five-dollar note Photo by Leslie Shaffer

Noble said major shareholder Goldilocks had dropped its objections to the troubled commodity trader’s restructuring plan in exchange for revisions and that the two would form a new partnership in the Middle East.

Shares of Noble surged 51.85 percent to S$0.082 by 9:43 A.M. SGT after the trading halt was lifted early on Wednesday.

Shareholders will receive an increased 20 percent of the equity of “New Noble,” and Goldilocks will be entitled to nominate a director to the new entity’s board of directors, Noble said in a filing to SGX before the market open on Wednesday.

Goldilocks, which holds around 8.1 percent of Noble’s equity, has provided an “irrevocable undertaking” to support the revised terms of the restructuring proposal, the filing said. Noble also agreed to reimburse Goldilocks for up to US$5 million in documented legal costs, it said.

Previously, the plan had been for shareholders to receive 15 percent of the new entity. The remaining equity will be 70 percent held by the senior creditor special purpose vehicle (SPV) and 10 percent by the management SPV.

Noble’s relationship with Goldilocks had been acrimonious as the fund had strongly protested the terms of the commodity trader’s restructuring proposal; other shareholders had also protested, but those protests had been dropped after Noble’s earlier modifications to the proposal. The disagreement had spurred Goldilocks to file a case in the Singapore High Court and SGX had also stepped in to require Noble to appoint an independent financial adviser to review the restructuring proposal.

Noble Chairman Paul Brough had warned in two separate recent letters to stakeholders, which were filed to the SGX, that if the proposed restructuring wasn’t completed, shareholders would get nothing as the company would need to seek formal insolvency or bankruptcy.

Goldilocks said in a statement on Wednesday that it would nominate its director and fund manager Ajit Joshi as its first representative to Noble’s board.

“Goldilocks has always had Noble’s interests at the vanguard of its thinking. A strong Noble and an even stronger New Noble go to the heart of our rationale to unlock shareholder value,” Ajit Joshi said in the statement.

“We are proud to have been part of Noble’s effort towards the completion of its restructuring that endeavors to create a sustainable balance between the interests of the shareholders and the future of Noble,” he said. “We will join hands in creating new opportunities in the Middle East, Goldilocks’ home market.”

New Middle East partnership

Noble and Abu Dhabi Financial Group (ADFG), which may be the ultimate parent of Goldilocks, also agreed to work together to expand the company’s presence in the Middle East, the filing said.

Subsidiary Noble Resources International entered a deal with ADCM Resources, an affiliate of ADFG, to become Noble Resources International’s strategic partner in the Middle East for new business opportunities and to assist in developing customer relationships in the region, the filing said.

“The company believes the strategic partnership agreement will be a constructive and cost effective way to expand the group’s business activities in the Middle East. The Middle East is an attractive market for Noble: the region’s economies are reducing their oil dependency and
businesses are seeking to diversify their interests and investments internationally,” Noble said in the filing. “The strategic partnership agreement with a strong local partner will enable the group to develop its network of customer, supplier and financier relationships in this key region.”

A new 50-50 joint venture will be established within 90 days in order to source new supply contracts with a term of two years or longer, it said. Noble will contribute US$4 million in funding to the venture on the restructuring effective date, it said.

Under the deal, ADCM Resources will receive a fee of US$3.5 million and an annual payment of 5 percent of the net profit from sales generated from new business by its services, it said. After Noble’s restructuring is effective, ADCM Resources will also receive US$750,000 in payments on either net profit reaching US$5 million or on 20 December, whichever is earlier, it said.

The partnership will be for an initial period of four years and could be extended for an additional four years, it said.

In a separate filing to SGX on Wednesday before the market open, Noble said that a legal claim filed against it on June 13, 2018, in the High Court of Justice of England and Wales by Pinpoint Asset Management and Value Partners, both of which are holders of Noble’s existing 6% perpetual capital securities, had been withdrawn.

Noble said it wasn’t served with the suit, which had sought an injunction restraining the transfer of assets related to the company’s restructuring, and that on 19 June, it received a copy of a notice of discontinuance by both holders.

 

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