Struggling commodities trader Noble Group agreed to sell its Americas-focused oil liquids business to Vitol for about $580 million as part of a debt-cutting strategy, and warned of a big loss for its third quarter.
Singapore-listed Noble’s shares were halted on Friday afternoon. Citing sources, Reuters had reported that Vitol, the world’s largest oil trader, was nearing a deal to buy Noble’s oil liquids unit.
Once Asia’s biggest commodities trading house, Noble is slashing jobs and selling assets to reduce its debt and win support from its lenders after a crisis-wracked two years. In July it agreed to sell its smaller North American gas and power business to Mercuria as it focuses on its core Asian coal trading and LNG businesses.
In a statement on Monday, Noble also warned of a total net loss of $1.1 billion to $1.25 billion in the three months ending September, citing non-cash losses and underlying trading results from its oil liquids and gas and power businesses.
This follows a $1.75 billion net loss reported in April-June.
“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.
Noble was plunged into crisis in February 2015 when Iceberg Research accused it of overstating its assets by billions of dollars – allegations that Noble rejected. That pain was exacerbated by a commodities downturn at the time.
The upheaval has also led to rating agency downgrades, fund raising, a series of writedowns and management changes, while Noble’s market value has plummeted to less than $400 million from $6 billion in February 2015. Its stock is down about 80 percent this year, and was little changed in early Monday trade.
Noble is a big player in the global physical oil market, trading crude and refined products. But its operations shrank this year due to higher prices and liquidity constraints. The company has blending and wholesale capabilities in North America and the Caribbean, alongside long-term storage leases globally.
A purchase of Noble’s oil liquids business will reinforce Vitol’s position as a leading oil trader.
Noble said the gross proceeds from the proposed sale of its oil liquids business would be $1.4 billion, and after deducting indebtedness of about $836 million the cash proceeds would be about $580 million.
Noble has been locked in negotiations with its core lenders to support its funding.
“Whilst no assurance can be given as to the outcome of these discussions, the group believes that these are open and constructive, and are moving forward,” it said.
The company also said it had obtained an extension of three months to December 20 of its waiver received on its committed unsecured revolving credit facility due in May 2018.