Noble Group Ltd. said March 12 that it decided not to pay the coupon due March 9 on its US$750 million notes maturing 2022 and is now availing a 30-day grace period on the payment.
The company intentionally missed the coupon payment, and its board said the company is "very close" to reaching final terms for a proposed debt restructuring deal. The company also consulted the ad hoc group of its senior creditors and took into consideration advice from its legal and financial advisers.
People familiar with the matter said Noble Group is racing to reach a restructuring deal before a US$379 million bond maturity March 20, Bloomberg News reported March 13. In January, the company announced an in-principle agreement to restructure US$3.4 billion in senior debt by converting half, about US$1.7 billion, into new equity. This agreement was approved by the ad hoc group, which comprised holders of about 30% of group's existing senior debt instruments at the time.
Two sources told Bloomberg that Noble Group could decide to continue trading even after a default on the maturing bond since the restructuring deal will reduce the risk of any enforcement proceedings against the group, given that holders of at least 25% of its bonds must request enforcement.
Meanwhile, the company signed a memorandum of agreement with Bianca Corp. and Primerose Shipping Co. Ltd. to sell a Kamsarmax dry bulk carrier vessel to Bianca for US$24 million in cash as part of the company's proposed restructuring transactions.
The vessel is operated as part of the group's freight business and is mortgaged to a financial institution. Noble Group did not identify the institution but said the bulk of the proceeds will be used to pay down the amount it owes to the institution under the relevant facility.
Completion of this transaction is expected between March 20 and April 16.
