Please send job moves to
[email protected]How Noble
Group dodged an
Iceberg collision
In May 2017, Paul Brough had just assumed
the chairmanship of NOBLE GROUP and
immediately faced a room full of angry
bankers demanding their money back from
the struggling commodity trader.
Mustering all his 25-plus years of
experience as a restructuring specialist,
Brough needed their support to keep open
the credit lines that underpinned the
operations of what had once been Asia’s
biggest commodity trading house.
At the meeting in Amsterdam in late
May, banks were shocked by a recently
reported quarterly loss and were in no
mood to keep supporting the company.
“The atmosphere in the room was highly
charged,” Brough, a former senior regional
partner at KPMG in Hong Kong who helped
wind up the Asian business of Lehman
Brothers, told Reuters in an interview.
“A number of them were already taking
the decision that they wanted to exit the
relationship,” he said.
The following week’s meeting with US
banks did not go much better, with Brough,
61, saying the banks “made it very clear
that they wanted their secure debt repaid
very, very quickly.”
However, Brough, who also managed
China’s Sino-Forest after its US$4bn
collapse in 2011, convinced the US banks to
give Noble a 120-day debt reprieve to sell its
assets in the United States.
From there, Brough, who took over from
company founder Richard Elman, brought
Noble back from among the biggest near-
death corporate experiences in Asia. The
company last month secured shareholder
support for a US$3.5bn debt restructuring.
In the 15 months between Brough’s
appointment and last week’s deal, Noble
dramatically downsized and reported
a US$4.9bn loss for 2017, including a
US$2.1bn valuation adjustment of its
controversial derivatives contracts.
By the time Brough became chairman,
Noble had fended off two years of
accusations by Iceberg Research that it had
INmATEDûITSûASSETSû.OBLE ûWHICHûHASûSTOODûBYû
its accounts, later revealed Iceberg to be led
by ex-Noble credit analyst Arnaud Vagner.COMPLEX RESTRUCTURING
Noble’s rescue is viewed as one of the
most complex debt restructurings due to
its global trading business and the mix of
creditors, from banks to different strata of
bondholders and shareholders.
When Noble won an extension for its
credit facilities in June 2017, its shares
surged 50%, but bond prices slid after it
skipped an interest payment.
For Brough, those summer months were
the lowest point in the salvage operation,
with “banks making aggressive requests”
and there were times Noble could have run
out of cash.
“We found ourselves having to increase
the margin that we were giving banksFORûOURûTRADEûlNANCEûFACILITIESûANDûFORûOURû
brokerage facilities,” he said.
Noble agreed to sell its US gas and power
business to Mercuria for US$248m in July
last year, a deal that also increased its trade
lNANCEûACCESSû4HENûINû/CTOBER ûITûANNOUNCEDû
the sale of its most capital-intensive business,
oil trading, to Vitol for US$1.2bn.h4HEûlRSTûGLIMMERûOFûHOPEûWASûWHENû
we announced the sale of the oil business,”
said Brough, who will step down after the
restructured company, focusing on coal and
freight trading in Asia, kicks off later this
year.
In November, Noble formally announced
the debt restructuring and then agreed
to a deal to give creditors 80% of the new
company equity. Resistance from big
shareholders such as Elman, and Goldilocks
Investment, an Abu Dhabi-based fund, put
it at risk.
But in March, Noble’s creditors agreed
to give existing shareholders a 20% equity
share, up from a previous 10%, with an
ultimatum – back the proposal or face
insolvency.
Noble will also gain US$800m in trade
lNANCINGûANDûHEDGINGûFACILITIESûFROMû).'û
and Deutsche Bank, the last two banks
supporting the company, down from 70
BANKSûlVEûYEARSûAGO
ANSHUMAN DAGAPlease contact us if you have information about job moves: [email protected]
Kelvin Lim, a
director in CITIGROUP’s
loan sales team in
Asia, has left the
bank.
Lim was based in
Singapore and spent
11 years with Citigroup
during which he was
responsible for loan
sales in South-East
Asia and also for
structured financings
from Asia.
His last day was
August 29.
Before Citigroup, Lim
worked for DBS Bank
as an associate in the
Singaporean lender’s
syndicated finance
team for three years
from 2004. KKR & CO has hired
Kazuyuki Kido as
managing director
in its Tokyo office,
effective last Tuesday.
Kido was most
recently with
Japanese consulting
and technology
provider Simplex
Holdings, where
he led operations
for leveraged and
secondary buyouts.He previously spent
more than 20 years
with Nikko Securities- now known
as SMBC Nikko
Securities – and its
private equity affiliate
Nikko Principal
Investments,
where he managed
around US$4bn
in investments,
according to KKR.
CITIGROUP has
poached two bankers
from Commerzbank
to bolster its ETF
capabilities in the
region.
Antoine de Saint
Vaulry joins as Asia
Pacific head of Delta
One ETF trading.
Based in Hong
Kong, he reports to
Sebastien Mailleux,
head of prime financeand Delta One for
APAC.
Pierre Thiriet has also
joined the Delta One
team in APAC. He
reports to de Saint
Vaulry and will focus
on pricing, trading
and risk management
related to Delta One
trading.“The atmosphere in the room
was highly charged. A number
of them were already taking the
decision that they wanted to
exit the relationship.”
For Brough, those summer
months were the lowest point
in the salvage operation, with
“banks making aggressive
requests” and there were times
Noble could have run out of
cash.