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Noble selling US-based ethanol unit to Mercuria for US$15.5M

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Noble selling US-based ethanol unit to Mercuria for US$15.5M

Troubled commodity trader Noble Group Ltd. plans to terminate the deal to off-load its US-based Noble Americas South Bend Ethanol LLC subsidiary and sell it to Mercuria Energy America Inc. unit Mercuria Investments US Inc. for US$15.5 million.

On Nov. 27 the company struck a deal with Zeeland Farm Services to sell the asset for US$12.5 million plus adjustments for working capital, inventory and debt.

Under the new deal entered Dec. 7, Mercuria will purchase the ethanol producer on the same terms as its deal with Zeeland Farm, except for the deletion of the provision relating to the go-shop period, and an increase in the base consideration of US$3 million.

Noble is expected to terminate its agreement with Zeeland Farm on Dec. 11 and will have to pay a termination fee of US$2 million.

Assuming the new deal was completed on Oct 1, gross consideration would approximate US$20 million, including a US$15.5 million base consideration, plus net working capital of US$900,000, and an inventory value of US$3.6 million, with no debt for the business as of Sept. 30.

Accordingly, net proceeds from the sale will be about US$18 million, after deducting the termination fee.

In October, Noble completed the sale of Noble Americas Gas & Power Corp., to Mercuria Energy for US$102 million.

Noble is also in the process of selling its global oil liquids business, Noble Americas Corp., to rival Vitol US Holding Co. for US$1.42 billion.

The debt-laden company has been slashing headcount and selling assets to reduce its debt burden.

Noble is also facing a potential default should it fail to reach a debt restructuring agreement or an extension for its US$1.1 billion revolving credit facility by Dec. 20.