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Noble Group flags up to US$140M Q2 loss, keeps focus on debt restructuring

Noble Group Ltd. said July 26 that it expects a net loss of US$115 million to US$140 million for the second quarter due to restructuring and financing expenses, and it will not pay the coupon due July 30 for its 6.75% senior notes maturing 2020.

As a result of the expected loss, its net asset position — defined as total assets minus total liabilities — was negative US$1 billion as of June 30.

The quarter's restructuring expenses are seen coming in at US$95 million, with net finance costs and taxes seen between US$70 and US$80 million. Most of the restructuring costs are tied to fees with the group's interim trade finance facilities, a work fee to the ad hoc group of creditors that supported its debt restructuring, and a waiver fee payable to its senior unsecured revolving credit facility.

"Such expenses also include legal and financial advisory fees. These amounts have been paid in accordance with the terms and conditions of the [restructuring support agreement]," Noble said.

The embattled commodities trader, once the largest in Asia, noted stronger income from supply chains during the quarter due to an uptick in commodity prices. However, its performance has been impeded by liquidity constraints and the availability of "competitive" trade financing to support its operations.

For the first half, Noble is expecting a net loss of US$185 to US$210 million for the same reasons as the quarterly loss.

"The board believes that the proposed restructuring, once implemented, should restore shareholders' equity and create a sustainable capital structure which will allow the group to reposition its business and expand on its position as a leading industrial and energy products supply chain manager in the Asia-Pacific region," Noble said.

Total cash and equivalents as of June 30 were about US$620 million, of which about US$180 million is with futures brokers and not immediately available for use. This compares to US$677 million as of March 31. Noble will provide financial figures for the first half Aug. 14.

In its third statement on the same day, the group said the High Court of Singapore had ruled in favor of the company and unit Noble Resources Ltd. in a US$48 million case made against them in 2012 by former Noble Group CEO Ricardo Leiman and his trustee company. The court also ordered the plaintiffs to pay two-thirds of Noble's costs of the proceedings.

Leiman sought damages from the company as it withheld bonuses, shares and options after his termination. He left in November 2011 after the trader reported its first loss in about 14 years.