Business as usual at K Line-Noble venture

 

It appears to be business as usual at K Noble, 'K' Line's joint venture with the embattled Noble Group. Sources said that operations at the Capesize chartering venture, which was formed in June 2012, are ongoing even as the Japanese carrier would not comment on Noble's financial woes.

 

'K' Line said that the company had no comment with regard to specific matters relating to its business partner.

 

However, insiders with 'K' Line told Fairplay that K Noble is operating normally.

 

Shipowners are monitoring the Noble Group after the commodity trader's rating was downgraded by Standard & Poor following a loss for the first quarter of 2017.

 

Hong Kong-based Noble Group incurred a USD129 million loss for the first quarter of 2017, deteriorating from a USD40.48 million profit in the first quarter of 2016. Since then, the company's stock has been trading at multi-year lows.

 

The Singapore-listed group blamed its loss on the dislocation in the coal markets during the quarter, causing the decoupling of the prices of key indices, and the liquidity dropping significantly.

 

Traded volumes of 46.9 million tonnes were also lower than the 56.8 million tonnes in the first quarter of 2016 due to roll-off of an existing contract, as well as price increases and liquidity management.

 

Headcount was reduced by approximately 30% in 2016 with a further 5% reduction through 31 March 2017, as Noble Group went into cost-cutting mode. Noble Group is expected to have fewer than 900 staff, from 1,525 employees in 2015.

 

Founding chairman Richard Elman is taking a back seat as emeritus chairman and Paul Brough, previously one of Noble Group's independent non-executive directors, will take over as the group's chairman and spearhead the reorganisation.

 

In a statement issued to the Singapore Exchange on 24 May, Noble Group said it remains in talks with various potential investors, and has informed the market that no assurance can be given that any discussion will result in a transaction. 

 

Noble Group is also said to be in talks with its banks to extend its USD2.8 billion credit facility.

Moelis & Company and Morgan Stanley have been appointed by Noble Group to review strategic alternatives. 

 

"The company continues to right-size businesses and to evaluate further asset sales," Noble Group said.

 

Contact Xiaolin Zeng at arachelle0@gmail.com

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