Noble Group Ltd., the embattled commodity trader that’s trying to hold on to its investment-grade credit ratings, sold the company’s remaining 49% in its agriculture unit to China’s Cofco Corp. for at least US$750 million ($1.06 million) in cash.
Noble said in a statement Wednesday that in addition to the upfront payment, it may receive as much US$200 million in additional amounts depending on the future growth of the unit, known as Noble Agri.
"The entire proceeds of the disposal will be used to pay down debt," Hong Kong-based Noble said.
Cofco, China’s largest food company, already owns the other 51% in Noble Agri, which it bought for about US$1.5 billion in 2014. The Beijing-based company aims to build a global agriculture trading operation to rival leading traders such as Cargill Inc.
In recent months, Standard & Poor’s and Moody’s Investors Service have said that they may reduce Noble’s credit rating to junk if its liquidity position doesn’t improve. The trader said six weeks ago it planned to raise US$500 million through asset sales to avoid that fate.
Noble said Wednesday it would tentatively take a non-cash loss of US$546 million as it carried a higher valuation for Noble Agri on its books than the sale price. Still, the trader said the cash injection from the sale would strengthen its balance sheet above the investment-grade threshold that both S&P and Moody’s use. Noble said in a separate slide presentation that its adjusted net debt would drop to US$1.76 billion after the sale, from US$2.51 billion beforehand.
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Noble said in a statement Wednesday that in addition to the upfront payment, it may receive as much US$200 million in additional amounts depending on the future growth of the unit, known as Noble Agri.
"The entire proceeds of the disposal will be used to pay down debt," Hong Kong-based Noble said.
Cofco, China’s largest food company, already owns the other 51% in Noble Agri, which it bought for about US$1.5 billion in 2014. The Beijing-based company aims to build a global agriculture trading operation to rival leading traders such as Cargill Inc.
In recent months, Standard & Poor’s and Moody’s Investors Service have said that they may reduce Noble’s credit rating to junk if its liquidity position doesn’t improve. The trader said six weeks ago it planned to raise US$500 million through asset sales to avoid that fate.
Noble said Wednesday it would tentatively take a non-cash loss of US$546 million as it carried a higher valuation for Noble Agri on its books than the sale price. Still, the trader said the cash injection from the sale would strengthen its balance sheet above the investment-grade threshold that both S&P and Moody’s use. Noble said in a separate slide presentation that its adjusted net debt would drop to US$1.76 billion after the sale, from US$2.51 billion beforehand.
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