SINGAPORE — Noble Group Ltd. announced on Jan. 28 that its shareholders approved the sale of its 49% stake in Noble Agri to COFCO.
Noble Agri is a joint venture between Noble Group and a consortium consisting of COFCO Corp., HOPU Investment and other international financial investors.
The vote received 90% approval from total votes cast.
The sale will be made to Viva Trade Investments Limited upon the terms and conditions of the share sale agreement dated Dec. 23, 2015, which was entered into by the seller, Noble Group, Viva Trade Investments Limited and COFCO International Limited (CIL). Viva Trade Investments Limited is an indirect wholly-owned subsidiary of CIL, which is in turn an indirect subsidiary of COFCO Corporation.
“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 (CEO). “On completion, which is expected 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. 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.”
Noble Group initially announced the sale of its 49% holding in Noble Agri Limited on Dec. 15.
On Dec. 22, COFCO Corporation announced that it had reached an agreement in which its subsidiary, COFCO International Limited (CIL), would acquire Noble Agri’s 49% stake held by Noble Group for $750 million. Upon the completion of the transaction, the company is expected to be renamed COFCO Agri.
Fitch Ratings affirmed on Jan. 14 that Noble Group Limited's (Noble) Long-Term Foreign-Currency Issuer Default Rating (IDR) and senior unsecured rating at 'BBB-'. The ratings on all its outstanding senior unsecured notes have also been affirmed at 'BBB-'. Other agencies have cut Nobles rating to junk status.
Noble has been under pressure to raise cash to avoid losing its investment grade rating and being dropped to junk bond status. Noble Group’s Corporate & Others segment, which includes Noble Agri Limited, reported on Nov. 13 a loss of $60.7 million compared to a $193.2 million profit in the same period of last year. Noble Agri has continued to operate at a loss in the nine months ended Sept. 30, as it has continued to be impacted by lower sugar prices. The latest quarter also saw rain impacting the ramp up of the seasonal harvest and lowering sugar yields.
In addition, Fitch said the affirmations are based on Noble's ability to maintain adequate access to unsecured committed bank facilities given its stronger balance sheet and reduced working capital requirements. Any signs of deterioration in the company's ability to access unsecured bank funding could result in negative ratings action.
Noble Agri engages in agricultural trading and processing businesses which it originates from low-cost producing regions such as South America, South Africa, East Europe, India, and Australia, to supply regions with high demand, such as Asia and the Middle East. The company owns and operates logistics and processing assets in strategic locations within key global trade flows. In 2013, the agricultural business carried 46 million tonnes of product globally.