Noble Group seeks $2.5 billion in borrowing base facility: sources

Tue Mar 8, 2016 5:27pm EST
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By Michelle Sierra

(Reuters) - Global energy firm Noble Group (NOBG.SI: Quote) is in the market with a $2.5 billion, one-year borrowing base revolving credit facility that will refinance existing debt due later this year, banking sources told Thomson Reuters LPC.

The renewal of Noble loans is eagerly watched by the market as the most important development this year for the embattled trader of commodities from iron ore to oil, which suffered a dip in investor confidence over the past year.

The loans that have Noble Americas as borrower include a $1.5 billion committed loan and a $1 billion uncommitted loan, which lenders can refuse to provide.

The facility that is being arranged by MUFG was offered to bank investors in New York on March 7. It will refinance and combine two existing loans including a $1.1 billion letter of credit facility and a $1 billion existing revolver. Investors have until March 25 to commit to the transaction.

The loans can be increased by $750 million, to $3.25 billion, and are available for the purchase, storage and sale of crude oil, base metals, natural gas, power, biodiesel, biofuel and other raw materials.

A borrowing base is the amount of money that can be borrowed under a revolving credit facility based on the value of the company’s assets. Noble’s loans will be secured by a first priority preferred security interest in all of the personal property assets of the borrower and subsidiary guarantors subject to certain exclusions.

Noble has mostly borrowed on an unsecured basis. Adding the borrowing base to its loans signals that given the current slump in raw material prices, the company had to come up with additional protection for lenders in order to access credit.

Noble is attempting to refinance its debt as it battles to boost investor confidence after Standard & Poor's and Moody's Investors Service cut the company's investment grade ratings to junk in January and in December 2015, respectively, following accusations on accounting irregularities and weak markets.   Continued...

The company logo of Noble Group is displayed at its office in Hong Kong, China January 22, 2016.  REUTERS/Bobby Yip