Commodities trader Noble Group reported a second- quarter loss of $1.75 billion on Thursday, weeks after warning it faced its steepest quarterly loss in a year and a half and would slash jobs and sell assets to cut debt.
Once Asia's largest commodities trading house, Noble is slimming down drastically to its core Asian coal trading business after a crisis-wracked two years. Last month, it announced the sale of its U.S. gas and power business and began a process to sell its oil liquids unit.
"Conservative liquidity management, scaling back of risk positions and constraints placed on the group's access to trade finance lines led to disruption costs and prevented the group from taking advantage of profitable opportunities," the Singapore-listed company said in a statement on Thursday.
It said the operating environment remained difficult, especially after the announcement of a net loss for the first three months of 2017. It said further non-cash valuation adjustments may be recorded following its strategic review.
Noble was thrust into the spotlight in February 2015 after previously obscure Iceberg Research accused it of overstating its assets by billions of dollars, which Noble rejected, and the company also faced a severe commodities downturn.
Noble's market value has plunged by about 95 percent to $340 million from $6 billion in February 2015, leading to rating agency downgrades, asset sales and fund raising to allay investor worries. Its stock is down 80 percent in 2017.
Including its first-quarter loss of $130 million, Noble's net loss for the six months to the end of June came to $1.9 billion which included $1.3 billion of writedowns related to the revaluation of some of its long-term commodity contracts. Its first-half loss last year was $14 million.
Noble also said its net debt rose by $945 million in the first half to $3.8 billion.
Chairman Paul Brough said Noble's partnership with Swiss trader Mercuria Energy Group
to improve access to trade finance in Asia to support its hard commodities business was faring well.
"We are now exploring additional capacity with Mercuria which we hope can come on stream in the course of the next few weeks," Brough, a restructuring expert who was appointed this year, told analysts on a conference call.
"I can't speak for Mercuria but I am speaking to Mercuria and I believe we've got common ground and the basis for exploring a further cooperation in the region."
"There's quite a bit on the table and quite a bit of interest coming from them," adding that Noble was also in talks with other parties.
The Hong Kong-headquartered company said it was still in discussions with its lenders. Noble faces the expiry of a $2 billion credit facility in October, a deadline set after it agreed a four-month extension with creditors.
Richard Elman, who stepped down as chairman this year, remains the company's biggest shareholder, with a stake of just over 18 percent. Other top shareholders include sovereign wealth fund China Investment Corp
and Orbis Investment Management.
(Reporting by Anshuman Daga; editing by Muralikumar Anantharaman and David Clarke)