Noble Announces a Loss of $250 Million or More
On 26 July, Noble Group Limited (Caa1 negative) announced that it would report an adjusted operating loss from supply chains of $250-$300 million in second-quarter 2017, significantly worse than an adjusted operating loss of around $3 million in first-quarter 2017. Adjusted net loss for the quarter, including exceptional items of $1.2-$1.3 billion inter alia for additional reserves for net fair value gains, would be $1.7- $1.8 billion. The profit warning is credit negative for Noble and increases the challenges the company faces while turning around its operations and tackling large debt maturities over the next 12 months. In its announcement, Noble also indicated that it had agreed to sell its North American gas and power businesses to Mercuria Energy America, Inc. for $248 million. Additionally, the company plans to exit its global oil liquids business and will dispose of additional assets over the next two years. The company’s forecast of deteriorating second-quarter financial results will keep default risk elevated. Although the company plans to dispose of key assets to reduce debt, it is uncertain whether these sales will raise sufficient proceeds to meet its $2.1 billion of debt maturities over the next 12 months. The increased losses partly reflect a loss of confidence among market participants, including Noble’s lenders. Consequently, Noble has had to conservatively manage its liquidity, scale back its risk positions, and limit its trading operations amid constraints on its access to trade financing. Noble’s asset disposal plans, if they materialize, would help address its short-term liquidity issues. However, the resultant substantial reduction in its scale and global reach would challenge the company’s ability to reshape its business model and generate profit and cash flow to service remaining debt. Noble’s global oil liquids and North American gas and power businesses comprise the majority of its energy segment, which generated 90% of the company’s revenue in the first quarter. Following the sale of these two businesses, Noble’s business portfolio will comprise energy coal, carbon steel materials, metals, freight and liquid natural gas businesses. Noble plans to use cash flow from its hard commodities businesses and asset sale proceeds to pay down debt. Two main credit lines, a $2 billion secured borrowing base facility for Noble Americas Corporation and a $1 billion secured borrowing base facility for Noble Clean Fuels Limited, will be retired. Noble will seek a new investor and strategic alliances to recapitalize and fund working capital for its remaining businesses. Noble faces significant liquidity risk. Its liquidity headroom of about $1.2 billion at 31 March 2017 (including readily available cash and unutilized committed facilities) is insufficient to cover the $600 million of debt due in the remainder of this year and $1.5 billion due in the first half of 2018. This headroom also may have narrowed meaningfully as a result of the sizable second-quarter loss.
On 26 July, Noble Group Limited (Caa1 negative) announced that it would report an adjusted operating loss from supply chains of $250-$300 million in second-quarter 2017, significantly worse than an adjusted operating loss of around $3 million in first-quarter 2017. Adjusted net loss for the quarter, including exceptional items of $1.2-$1.3 billion inter alia for additional reserves for net fair value gains, would be $1.7- $1.8 billion. The profit warning is credit negative for Noble and increases the challenges the company faces while turning around its operations and tackling large debt maturities over the next 12 months. In its announcement, Noble also indicated that it had agreed to sell its North American gas and power businesses to Mercuria Energy America, Inc. for $248 million. Additionally, the company plans to exit its global oil liquids business and will dispose of additional assets over the next two years. The company’s forecast of deteriorating second-quarter financial results will keep default risk elevated. Although the company plans to dispose of key assets to reduce debt, it is uncertain whether these sales will raise sufficient proceeds to meet its $2.1 billion of debt maturities over the next 12 months. The increased losses partly reflect a loss of confidence among market participants, including Noble’s lenders. Consequently, Noble has had to conservatively manage its liquidity, scale back its risk positions, and limit its trading operations amid constraints on its access to trade financing. Noble’s asset disposal plans, if they materialize, would help address its short-term liquidity issues. However, the resultant substantial reduction in its scale and global reach would challenge the company’s ability to reshape its business model and generate profit and cash flow to service remaining debt. Noble’s global oil liquids and North American gas and power businesses comprise the majority of its energy segment, which generated 90% of the company’s revenue in the first quarter. Following the sale of these two businesses, Noble’s business portfolio will comprise energy coal, carbon steel materials, metals, freight and liquid natural gas businesses. Noble plans to use cash flow from its hard commodities businesses and asset sale proceeds to pay down debt. Two main credit lines, a $2 billion secured borrowing base facility for Noble Americas Corporation and a $1 billion secured borrowing base facility for Noble Clean Fuels Limited, will be retired. Noble will seek a new investor and strategic alliances to recapitalize and fund working capital for its remaining businesses. Noble faces significant liquidity risk. Its liquidity headroom of about $1.2 billion at 31 March 2017 (including readily available cash and unutilized committed facilities) is insufficient to cover the $600 million of debt due in the remainder of this year and $1.5 billion due in the first half of 2018. This headroom also may have narrowed meaningfully as a result of the sizable second-quarter loss.
Ciò detto, resta il fatto che Frontier rimane in una situazione precaria, ma non drammatica (ancora).
