According to sources, Noble Group is planning to raise up to $3bn in bank debt as part of its refinancing plan outlined earlier.
Noble could pay an interest rate of 225 basis points over the U.S. dollar Libor on a $1 billion one-year unsecured loan, more than twice the 85 basis points it paid just a year ago.
Further, Noble’s credit facility of about $2 billion would be backed by trade flows and inventories, with an announcement expected this week.
The number of lead arrangers on the unsecured loan was eight banks, which compared with 15 on a loan last year.
According to sources, Societe Generale, Mitsubishi UFJ Financial Group, ING and HSBC were among the lead arrangers on the transaction.
The debt issuance is part of the company’s Chief Executive Yusuf Alireza’s plan to sell assets, cut business lines and trim debt.
According to Noble Group’s CEO Yusuf Alireza, the company is planning to restructure its debt amid rising borrowing costs. The firm seeks to recover from a commodity market slump that saw it post its first annual loss in almost 20 years and had its credit rating downgraded to junk.
As per the company’s presentation for its upcoming AGM, average cost of debt was seen rising from an estimated 3.9% in 2016 to 4.1% in 2017, before dropping back to 3.8% in in 2018. Although borrowing costs were rising on the company’s revolving facility, its weighted-average cost of debt was expected to remain at the same level.
Further, the company seeks to raise a $1bn unsecured loan on which it faces higher borrowing costs, and was also looking to raise a $2bn loan backed by inventories.
CEO Alireza stated that the company aimed to refinance debt before May 2016.
Hong-Kong based commodity conglomerate Noble Group Ltd. warned that it would post a loss for the 4Q’15 and FY’15 period after facing a $1.2bn non-cash impairment and exceptional charge. Additionally, the company faced a loss on the sale of its subsidiary Noble Agri Ltd.
Noble warned that commodity prices, especially that of thermal coal would continue to remain subdued in the near-term.
The company’s management adopted a conservative price of thermal coal of $55 per tonne to ensure its portfolio cushions itself against lower prices in future. However, prices continue to hover around 2006 lows of $47 per tonne at Newcastle, Australia, an Asian benchmark for thermal coal, for the week ended 22 January.
Lower commodity prices over 2015 have dragged the company’s share prices down over 65% and its credit ratings have been downgraded to junk.