It's been a long time coming but the end could finally be near for Noble Group's long-running debt saga -- subject to shareholder approval, that is.
In a circular released on Friday, Singapore's embattled commodities group said its $3.5 billion debt-for-equity swap plan is set to be put to a shareholders' vote on August 27.
The proposed exchange of debt for shares in a new company dubbed "New Noble" aims to save the commodities trader -- once Asia's biggest -- from failure and already has the approval of more than 30% of shareholders, including its founder Richard Elman.
It also has the backing of more than 42% of Noble's perpetual bond holders, including Value Partners and Pinpoint Asset Management, and over 86% of its senior creditors, the company added in its statement.
The shareholder meeting, which will take place at the M Hotel near Marina Bay and also vote on the disposal of two vessels to Cyprus-based Aeolian Spirit Shipping for $46 million, aims to bring down the curtain on a three-year corporate drama that has gripped Asian markets.
Noble's share price has tumbled more than 95% since 2015, when short-seller Iceberg first published a series of reports accusing the company of questionable accounting practices and doubting its ability to generate cash.
In the intervening years, Noble has sold off a slew of major assets globally, slashed jobs and retrenched to its core business of coal and freight trading.
If shareholders give the swap the green light, Noble's senior creditors will take a haircut of 50% on their bonds and in exchange hold 70% of the equity in the new restructured company. Existing shareholders and the Noble management will be left with 20% and 10% of the new company, respectively.
In addition, holders of Noble's Singapore-listed $400 million perpetual bonds will receive new securities with a face value of $25 million, up from the original all-cash offer of $15 million it first proposed in late January.
In an April blog post, Iceberg also said Noble’s debt-for-equity swap has "zero chance of success”.
Bond market investors, though, currently see it differently. In the secondary market, Noble’s 2022 bonds rose to their highest level since March, trading at 48.3 cents on the dollar on Friday morning, according to a high-yield bond trader.
“Noble has demonstrated a much needed come back from the brink of collapse,” said the trader. “It made some good progress and the bond prices have bounced back significantly.”
“The board believes that the [restructuring support agreement] represents the best and most fair deal for all parties and the best way to preserve the residual value in the company for all stakeholders,” Paul Brough, chairman of Noble Group, said in a statement to the Singapore Exchange.
Were shareholders to vote in favour of it, he said, Noble would enter the final procedural stages of its restructuring and establish New Noble.