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Noble Group says debt restructuring 'only realistic remedy' for creditors

The trustee for Noble Group Ltd.'s US$379 million 3.625% senior notes due 2018 filed a notice of default against the company due to its failure to pay the principal amount on March 20.

The Hong Kong-based commodities trader said that the 2018 noteholders who have not signed the restructuring agreement can take action, but "it would be very difficult to successfully wind up the company, which is the only realistic remedy available to such a holder."

The company previously noted that it will not make payments due on a US$379 million bond due in 2018 and a US$750 million bond due in 2022.

A US$3.45 billion debt restructuring agreement signed earlier this month provides for a standstill for creditors' existing senior claims, which includes the 2018 notes, the 2022 notes, the 6.75% U.S. dollar fixed rate senior notes due 2020 and the company's revolving credit facility.

The company said March 22 that creditors representing about 50% of the senior claims have signed the restructuring deal to date, and more are expected to join in.

The signees, however, are not allowed to take any action against Noble with respect to their existing claims.

In order to start proceedings against the company, creditors holding 25% of the 2018 notes will need to file a request to the trustee, as they cannot move against the company directly.

"Given the support for the [restructuring support agreement,] and the time and cost associated with pre-funding the trustee, the board considers that the likelihood of a group of 2018 noteholders successfully organizing winding up process in respect of the company to be low."

Noble noted that even if a group of noteholders do manage to sue for the owed amount, or attempt to wind up the company, the court is expected to "adjourn or stay any such proceedings" until the restructuring is completed.

Meanwhile, the company separately said the same day that the sale of its Kamsarmax dry bulk carrier vessel to Bianca Corp. for US$24 million in cash is now complete.

Previously in the week, Noble's founder Richard Elman resigned as a nonexecutive director, effective March 20, after shareholder Goldilocks Investment Co. filed a lawsuit against the company and its executives in the Singapore High Court, alleging the company inflated profits and its balance sheet to raise money.