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Shareholder takes Noble Group to court, S&P flags 'cross-defaults'

Noble Group Ltd. shareholder Goldilocks Investment Co. filed a lawsuit against the Hong Kong-based commodities trader and its executives in the Singapore High Court, alleging the company inflated profits and its balance sheet to raise money, Bloomberg News reported March 20, citing court documents filed by Morgan Lewis Stamford LLC.

"If anything, this will likely drag out the debt restructuring process and increases the uncertainty on the outcome," a credit analyst at iFast Corp. in Singapore told Bloomberg.

The lawsuit alleges that management tried to cover up salary increases when company accounts came under scrutiny and in the public eye after Iceberg Research raised concerns about its accounting practices.

Noble Group founder Richard Elman, CEO Will Randall, Chairman Paul Brough and CFO Paul Jackaman were named defendants in the Goldilocks lawsuit.

The court action seeks to recover US$169 million paid to company executives between 2011 and 2017 plus any interest and damages determined by the court.

Noble Group said in a statement to Bloomberg that the company has yet to receive the writ and it would defend the case.

Separately, S&P Global Ratings downgraded the company's debt rating to D from CC after the company missed the principal and coupon payments on two of its outstanding U.S. dollar notes due March 20.

"We lowered the ratings because Noble has missed the principal and coupon payment for its 2018 notes due March 20, 2018. Noble also missed the coupon payment on its 2022 notes due March 9, 2018," the rating agency said.

The embattled company recently said it will not make payments due on a US$379 million bond due in 2018 and a US$750 million bond due in 2022.

"The failure to make these payments will trigger cross-defaults on the company's other obligations. We do not expect Noble to meet any outstanding obligations as the company preserves its assets during the restructuring process," S&P said.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.