SINGAPORE, Oct 23 (Reuters): Struggling commodities trader Noble Group agreed to sell its Americas-focused oil trading business to Vitol for about $580 million as part of a debt-cutting strategy, and warned of a big loss for its third quarter.
Monday's move came after Reuters reported late on Friday that Vitol, the world's largest oil trader, was nearing a deal to buy Singapore-listed Noble's oil liquids unit.
Noble, whose founder Richard Elman took advantage of a commodities bull run to build it into one of the world's biggest traders after starting it in 1986, is shrinking to an Asian-centric company focused on its core coal trading, LNG and freight businesses.
It is slashing jobs and selling assets to reduce debt and win support from lenders after a crisis-wracked two years. In July it agreed to sell its smaller gas and power business to Mercuria.
"I guess the question is when are they going to basically turn around their business, which is quite key. If they can actually provide more details, what sort of assets they can still sell, that would be great," said Annisa Lee, Nomura's head of Asia ex-Japan's flow credit analysis.
Hong Kong-based Noble was plunged into crisis in February 2015 when Iceberg Research questioned its accounts, and then the company was hit by a commodities downturn.
While Noble has stood by its accounts, the upheaval triggered a share price collapse, credit downgrades, a series of writedowns, as well as fund raising and management changes. Noble's market value has plummeted to less than $400 million from $6 billion in February 2015.
Noble said gross proceeds from the sale of its oil liquids business would be $1.4 billion, and after deducting debt of about $836 million, cash proceeds would be about $580 million.
"It gives the company some positive momentum going into a liability management exercise and it likely raises recovery realizations under a restructuring scenario modestly," said Todd Schubert, fixed income analyst at Bank of Singapore.
In July, Noble announced an up-to-$1 billion disposal plan for assets outside North America over the next two years as Chairman Paul Brough, a restructuring specialist appointed in May, sought to tackle Noble's more than $3 billion of debt.
Another report adds: Oil prices rose on Monday over supply concerns in the Middle East and as the US market showed further signs of tightening while demand in Asia keeps rising.
Brent crude futures were at $57.87 at 0622 GMT, up 12 cents, or 0.21 per cent, from their last close. US West Texas Intermediate (WTI) crude was at $52.04 per barrel, up 20 cents, or 0.39 per cent.
"Oil prices are holding comfortably above $50 as possible supply disruptions in the Kurdish region of Iraq support prices," said William O'Loughlin, analyst at Rivkin Securities.
"US production was also recently impacted by a hurricane for the second time in as many months and the number of US drilling rigs declined for the third week in a row," O'Loughlin said.
The amount of US oil rigs drilling for new production fell by seven to 736 in the week to Oct20, the lowest level since June, energy services firm Baker Hughes said Friday.