By Anshuman Daga
SINGAPORE (Reuters) - Struggling commodities trader Noble Group agreed to sell its Americas-focused oil trading business to Vitol for about $580 million as part of a debt-cutting strategy, and warned of a big loss for its third quarter.
Monday's announcement came after Reuters reported late on Friday that Vitol, the world's largest oil trader, was nearing a deal to buy Singapore-listed Noble's oil liquids unit.
Noble, founded in 1986 by Richard Elman who took advantage of a commodities bull run to subsequently build it into one of the world's biggest traders, is shrinking to an Asian-centric company focused on coal trading, LNG and freight.
It is slashing jobs and selling assets to reduce debt and win support from lenders after a crisis-wracked two years. In July it agreed to sell its smaller gas and power business to Mercuria.
"I guess the question is when are they going to basically turn around their business, which is quite key. If they can actually provide more details, what sort of assets they can still sell, that would be great," said Annisa Lee, Nomura's head of Asia ex-Japan's flow credit analysis.
Hong Kong-based Noble was plunged into crisis in February 2015 when Iceberg Research questioned its accounts, and then it was hit by a commodities downturn.
While Noble has stood by its accounts, the upheaval triggered a share price collapse, credit downgrades, a series of writedowns, as well as fund raising and management changes. Noble's market value has plummeted to less than $400 million from $6 billion in February 2015.
Noble said it would receive gross proceeds of about $1.42 billion from the planned sale of its oil liquids business, while net proceeds would have been about $580 million after repaying $836 million of loans. It said the amount calculated is for "illustrative purposes" and is based on its end-June financials and includes proceeds from its gas and power business.
"It gives the company some positive momentum going into a liability management exercise and it likely raises recovery realizations under a restructuring scenario modestly," said Todd Schubert, fixed income analyst at Bank of Singapore.
In July, Noble announced an up to $1 billion disposal plan for assets outside North America over the next two years as Chairman Paul Brough, a restructuring specialist appointed in May, sought to tackle Noble's more than $3 billion of debt.
"Conservative liquidity management and constraints placed on the group's access to trade finance lines led to disruption costs and prevented the group from taking advantage of profitable trading opportunities," the company said on Monday.