Noble in Mercuria Deal as it Cuts Debt, Expenses
Noble agrees to sell U.S. gas and power business to Mercuria.
Commodities trader Noble Group (NOBGF) announced a dramatic overhaul on Wednesday that will involve a partnership with rival Mercuria, as it flagged assets sales, efforts to more than halve its staff numbers and a crippling quarterly loss.
In a surprise announcement, Singapore-listed Noble said the need to scale back risk and conserve cash had battered its business in the quarter and it would also write down the value of some of its assets, resulting in a loss of $1.7 billion to $1.8 billion - more than double its market value.
The company, which has been scrambling to raise cash and cut back its debt, said it would sell its U.S. gas and power business to Mercuria Energy Group for $248 million and had begun the process of selling its oil liquids business - further narrowing its focus on coal.
Mercuria is also stepping in as a partner more broadly, as the two "explore strategic alliances in Asia", Noble said.
Noble, which has been seeking a strategic investor, said it continues to look for a partner to recapitalise its remaining businesses and would seek tie-ups "including with Mercuria, to fund working capital and other capital requirements to maintain and grow volumes in the future".
As part of its cost cutting and as a result of the reduced businesses, the group's headcount will decline to 400 from about 900.
Noble said negotiations with its lenders were continuing.
Noble's troubles started two years ago when its accounts were questioned by Iceberg Research, sparking a dramatic collapse in its share price and ratings agency downgrades, forcing a sale of its assets and a fund raising to allay financing worries in a brutal commodities market. Noble has stood by its accounts.
Reporting by Anshuman Daga
