Singapore-listed commodities trader Noble Group has reached out to relationship banks to put together a revolving credit facility, according to sources familiar with the matter.
The Hong Kong-based company founded by British businessman Richard Elman is eyeing a facility worth up to $3 billion with tenors of one and three years and is expecting commitments by the end of March, one lender told FinanceAsia.
Among the head winds are allegations by Iceberg Research published in February that Noble Group used inappropriate accounting methods to avoid impairments and inflate profits. Noble has since rejected those allegations.
Noble Group also posted its first quarterly net loss in three years in the final quarter of last year. For 2014 as a whole, Noble Group's net profit slumped by 44% year-on-year to $132 million as it took a hit from a $200 million impairment on its stake in Yanzhou Coal.
"The timing is unlucky for them," said the lender. "Given the recent fourth-quarter numbers, we have to be more circumspect."
S&P analyst Cindy Huang told FinanceAsia that the impairments Noble Group took are non-cash items and have not affected its leverage ratios or liquidity. In March, the ratings agency left its BBB- rating of the company unchanged.
Equity investors, however, have sold the stock and Noble Group's shares are down 11.8% year-to-date.
Well known borrower
Noble Group is a frequent visitor to syndicated loan markets, with a wide group of relationship lenders, and typically taps the market annually.
"We are prepared to come back with a proper figure," said a second lender planning to commit funds to the facility.
In May last year, Noble Group closed a $2 billion 364-day revolving loan facility and the mandated lead arrangers were ABN Amro, Agricultural Bank of China, ANZ, Bank of America, BTMU, Commerzbank, Commonwealth Bank of Australia, Rabobank, DBS, Goldman Sachs, HSBC, ING, JP Morgan, Natixis, Royal Bank of Scotland, Société Générale, Standard Chartered and United Overseas Bank.
The company has also been paring down debt levels and last year sold a 51% stake in its agricultural unit Noble Agri to Chinese grains giant Cofco and a consortium of investors led by Chinese private equity firm Hopu for $1.5 billion.
"They reduced their debt quite significantly last year from the sales proceeds of Noble Agri," Huang told FinanceAsia.
Noble Group's total debt stood at $4 billion as of December 2014. But based on S&P's adjusted numbers -- which takes into account surplus cash, readily marketable inventories, and the company's remaining 49% share of Noble Agri's net debt due to a guarantee on the unit's facility -- it is more like $3.4 billion.
