February 25, 2016 / 11:01 AM / 2 years ago

Noble Group flags refinancing on track after first loss in 2 decades

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

SINGAPORE (Reuters) - Singapore-listed commodity trader Noble Group (NOBG.SI) expects to refinance its debt ahead of schedule, after reporting its first annual loss in nearly 20 years on Thursday, battered by a $1.2 billion writedown for weak coal prices.

Noble, one of the biggest traders of commodities from coal to iron ore to oil, is battling to boost investor confidence after Standard & Poor’s and Moody’s cut its investment grade ratings to junk in December, following a bruising accounting dispute and weak markets.

"We have self-evidently advanced our key strategic objectives over the last three years despite a very difficult external environment," CEO Yusuf Alireza, who has fought back by selling assets, cutting business units and trimming debt, said in a statement. (bit.ly/1VGhqwZ)

Noble’s junk rating has stoked concerns about its refinancing ability but Alireza, a former Goldman Sachs banker said it expects to close its refinancing ahead of a May due date.

“We have $2.2 billion of a revolver. Clearly we have approved the term sheet to a number of our core banks and we will be moving towards the refinancing of the revolver,” said Alireza, who was asked about the spreads and size of the refinancing by analysts in a call, but declined to give details.

The company highlighted the imminent receipt of $750 million from the sale of its agri business.

On Thursday, Noble reported an annual loss of $1.67 billion after the non-cash impairment charge, versus a profit of $132 million a year ago on a 22 percent fall in revenue. It proposed no dividend for last year.

The company had warned of the full-year loss two days ago.

After Noble’s loss warning, Moody’s cut its corporate rating and senior unsecured bond ratings to Ba3 from Ba1, while S&P said the loss could complicate its refinancing.

“The downgrade shouldn’t come as a surprise to anyone, but it is a major issue for the refinancing,” Robert Southey, managing partner at London-based boutique firm Trench Capital Partners, said ahead of Noble’s results.

“The core banks are in a ‘Catch 22’, they can’t all sell out at their desired price, whilst applying usual lending criteria is fraught with the risk that markets worsen and they are left holding the bag,” Southey said.

Already hit by the collapse in commodity markets, Noble’s shares have plunged by two-thirds in the past 12 months, and its bonds have sold off after Iceberg Research alleged it was inflating its assets by billions of dollars.

Noble rejected the claims and board-appointed consultants PricewaterhouseCoopers found it had complied with international accounting rules.

Noble’s mining and metals business swung to a loss on a pre-tax basis for the year, while the energy segment posted a 21 percent jump in profit before tax and interest.

Last month, Noble’s chairman Richard Elman told Reuters in an interview that the company’s plans to bring in new investors were taking time.

Elman is preparing Noble, a Hong Kong-based group he set up with $100,000 in 1986, for a new era as commodity prices are mired in their deepest slump in recent years.

Reporting by Anshuman Daga and Rujun Shen; Additional reporting by Saeed Azhar; Editing by Muralikumar Anantharaman and David Evans

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