Noble Shareholders Approve Ag Unit Sale to COFCO

Noble Group shareholders approved the sale of the group’s 49% stake in Noble Agri to China’s state-owned COFCO for $750 million on January 28, according to CNBC. Of the total votes cast, 90% voted in favor of the deal.

COFCO owns the remaining 51% stake in Noble Agri, which it bought in 2014 for $1.5 billion, and upon the closing of the deal, it is planned that Noble Agri will be renamed COFCO Agri.

“The overwhelming mandate we have seen for the sale of our remaining shareholding in Noble Agri confirms the shareholder support we have in our continued move towards becoming an asset-light company,” said Yusuf Alireza Noble Group’s chief executive officer, reports World Grain.

The sale, which was originally announced by Noble Group on December 15, 2015, is expected to be completed by the end of February.

“…the transaction will generate an infusion of $750 million in cash and removes the group's contingent guarantee related to Noble Agri bank lines in excess of $3 billion,” said Alireza. “Furthermore, due to the structure of the transaction, the group will continue to enjoy any upside from the creation of future value at Noble Agri.”

As commodity companies are struggling in a challenging market, causing investors to be increasingly wary, Standard & Poor’s, along with Moody’s Investors Service cut Noble Group’s credit rating to junk, as the company announced further bond repurchases. However, Bloomberg reports that Noble Group’s chief executive officer, Alireza, stresses that the group still retains the support of its banks, as he attempts to secure the confidence of shareholders.

“Banks are concerned about the sector, investors are concerned about the sector,” Bloomberg reports Alireza told shareholders ahead of the vote, referring to commodities. “The best thing to do is to show to our shareholders we have liquidity.”

Noble Group’s stock fell by 65% last year amid controversy regarding its accounting methods and a free fall for commodities, however leadership within the group is optimistic with Chairman and founder, Richard Elman saying to Reuters earlier this month that he plans for Noble to be a smaller, more nimble company.

As of September 30, the group had $14.2 billion of liabilities according to its financial report, including $2.5 million of bank debt and $458 million worth of bonds due within a year. In addition, the group secured a $2.3 billion loan facility in May from a group of 35 lenders, and in October the group completed a $1.1 billion credit facility from six banks led by Bank of Tokyo-Mitsubishi UFJ Ltd.

Alireza told shareholders that although the company is carrying $2.6 billion of debt that is scheduled to mature, Bloomberg reports that he noted that these debts can be rolled over, however he did not disclose a set time frame for such action.