Bowing to criticism from the Singapore Exchange (SGX) and other investors, embattled Noble Group is removing a provision in its $3.4 billion debt restructuring proposal that penalized shareholders voting against the plan.
The debt-for-equity swap is crucial for the survival of the Singapore-listed company, which has sold billions of dollars of assets, taken hefty writedowns and cut hundreds of jobs over the past three years to slash debt.
Noble has secured the backing of its creditors, but it also needs approval from a majority of its shareholders.
“If more than half of the shareholders vote in favour of the restructuring, all shareholders, irrespective of their vote at the special general meeting, will receive the same treatment and will participate in the restructuring,” Chairman Paul Brough said in a letter addressed to shareholders and sent to SGX late on Wednesday.
Last month, SGX’s regulatory unit criticised Noble’s proposal and said shareholders should be able to vote freely and their vote should not have a bearing on whether they are entitled to shares in the restructured company.
Noble is seeking to halve its debt and hand over 70 per cent of the restructured business to creditors, who are mainly made up of hedge funds. Existing shareholders will get 15 per cent equity in the new company.
Once Asia’s largest commodity trader, Noble was plunged into crisis in February 2015 when Iceberg Research questioned its books. Noble has stood by its accounting.
Noble has warned that it is likely to enter into a formal insolvency or bankruptcy process if shareholders vote against the restructuring plan.
In an eight-page letter sent on Wednesday, Brough laid out why the restructuring was the only option for the company’s survival as it was already in default on its $3.4 billion of its debt obligations.
“The company has few options and it is running out of time,” said Brough, adding that the restructuring also provides Noble with a committed trade finance facility of $700 million.
This week, Noble won the support of its founder and biggest shareholder, Richard Elman, who holds about 18 per cent of its shares after it sweetened the terms of its proposal for shareholders. Some other equity holders have opposed the plan.
Noble has not yet set a date for shareholders to approve the restructuring