June 6 (Reuters) - Noble Group’s main banks are in talks to decide whether to give the commodity trader an extension on its credit line or force it into a restructuring or liquidation, the Financial Times newspaper said on Tuesday, citing sources with knowledge of the discussions.
Banks including HSBC, Societe Generale, ABN Amro, Citigroup and ING, have appointed legal advisers to consider the case for extending the $2 billion line of credit, “so the Hong Kong-based company can continue its lengthy search for a major new investor to recapitalise the business”, the FT said.
Law firm Clifford Chance has been appointed by Noble’s lenders to advise on whether bankruptcy or liquidation would give them the best means of recouping the borrowing provided to Noble if the credit line is not extended, the paper said.
Banks have also hired consultants Alvarez & Marsal, who are assessing the collateral pledged by Noble against the credit line, FT said.
The struggling commodity trader is asking banks to extend the credit line until the end of the year while it looks for a strategic investor.
Citigroup, ING and Noble Group declined to comment. HSBC, Societe Generale and ABN Amro did not immediately respond to requests for comment outside regular business hours.
“I think it is likely that (Noble) will get some extension (to the credit line) but it all depends on how much the lenders believe in the credibility of management and its plans,” an executive at one of Noble’s lenders was quoted as telling the FT.
Noble has struggled ever since Iceberg Research questioned its accounts in early 2015, which came at a time of a brutal downturn in commodity markets. The company has stood by its accounts.
But the share price collapsed and credit rating downgrades, management upheavals and a series of writedowns, asset sales and a fundraising ensued.
Earlier this year the company reported it made a net profit of just $8.7 million in 2016, following a net loss of $1.67 billion in 2015, its first loss in nearly two decades.
Noble’s market value has shrunk to $354 million currently from $6 billion in February 2015. (Reporting by Sangameswaran S in Bengaluru; Editing by Greg Mahlich)