(Bloomberg) -- One of Noble Group Ltd.’s top shareholders has stepped up its criticism of the commodity trader, describing expected losses as “shocking” and warning that the billions in red ink may pile more pressure on investors to agree to a debt-for-equity rescue plan.
The net losses will “erode what little cash Noble has left, and puts further pressure on stakeholders to accept the restructuring proposal,” Goldilocks Investment Co. said in a statement on Tuesday, referring to more writedowns on derivatives contracts as well as fourth-quarter losses on its core business. “These figures are extremely shocking.”
Noble Group, which is scheduled to report earnings on Wednesday, warned last week it will post a loss for the final three months of last year, bringing its expected loss for 2017 to almost $5 billion. While the Hong Kong-based company is seeking to get investors to agree to the rescue plan, which will hand control of the group to creditors and give management a holding of up to 20 percent, Goldilocks is leading opposition to the proposal.
“The profit warning indicates that Noble’s remaining core business is still hemorrhaging cash,” the Abu Dhabi-based group said. “We urge all stakeholders -- shareholders and creditors -- to join Goldilocks in opposing the proposed restructuring and work together for a more equitable and meaningful turnaround for all.”
Under the plan, which has been backed by some creditors, a proposed agreement will see about half of the company’s $3.5 billion in debt, including bonds, switched into new equity, with perpetual bondholders offered a few cents on the dollar. All existing shareholders will get a 10 percent stake. Goldilocks has complained of “massive dilution”.