Noble Group Ltd. is Fighting to Survive

Noble Group

For over two years now, Noble Group Ltd (OTC:$NOBGF) has been feeling the heat. The company, which was founded by Richard Elman, recently faced several challenges, including the decision to offload its oil-trading unit to Vitol group.  The company has chosen to downsize to stay afloat.

After an 84% slump this year, its shares dwindle near 17-lows. Its bond trading is in distress and Noble still needs to deal with the obligations of billions of dollars towards banks and bondholders.

After the close of trades in Asia next Thursday, the quarterly trader report results will be available. However, even without those results, looking at some of the other issues Noble Group is facing shows a big possibility that the company will need to look at restructuring or selling

Below are more facts which bring into question how much longer Noble Group Ltd. can sustain its business:

  • At the end of June, Noble’s liquidity headroom stood at $1.4 billion. Following the repayment of a term loan ($650 million) and cancellation of a revolving credit ($565 million), the small remaining amount of spare capital available is daunting.
  • Restrictions on Noble’s usable cash has forced the company to deal with significant credit restraints which in turn has impacted trading and capacity for generating earnings. A direct consequence of the situation was a loss of confidence from lenders, suppliers, customers, and counterparts.
  • The debt that they acquired was more than $3 billion which was more than the amount they received from selling to Vitol. The amount that received from the sale should have been able to pay two facilities
  • Even now the company is hemorrhaging money, even just with the continuing operations. For the third quarter, experts are estimating a net loss of $50 million to $100 million.
  • At Noble’s highest peak of success, there were approximately 15,000 staff members. This year the number went down to 1050, which is expected to drop another 400

Through looking at the staggering liquidity of the company and its financial issues, it is quite clear that it would be difficult, or even impossible to bounce back from the situation.

                                                                                                                                                                                                       Featured Image: twitter                    

About the author: Stephanie graduated with a BA in Communications from Trinity Western University in 2015. As well as writing financial content, Stephanie works as a freelance communication contract writer.