Noble

Noble: The commodity trader has entered into an agreement to sell its remaining 49% stake in Noble Agri to Chinese food giant COFCO for US$750m, with a deferred consideration of up to US$200m subject to future growth of the unit.

Recall just a year ago, COFCO forked out US$1.5b for the initial 51% stake in the agriculture unit.

While the disposal is expected to be cash flow positive, Noble is expected to net an estimated book loss of US$546m, taking into account the carrying value of US$1.3b as at end-3Q15.

The group intends to use the net proceeds from the sale to repay loans, in a bid to alleviate its debt load and ease concerns raised by credit rating agencies in the past two months. On a proforma 3Q15 basis, the sale would shave its adjusted net debt to US$1.8b from US$2.5m and net debt/capitalization to 43.1% from 45.1%.

The transaction will also release the group from existing guarantees for Noble Agri's debt and fulfills its earlier commitment to raise US$500m through asset disposals in order to meet investment rating metrics.

Bloomberg consensus currently has 4 Buy and 6 Hold ratings on the counter, with an average TP of $0.64.