Oil firm mulls stake buy in Noble

The company logo of Noble Group is displayed at its office in Hong Kong, January 22, 2016. [Photo / Agencies]

Sinochem Group is in early talks to become a strategic investor in Noble Group Ltd, providing the embattled Asia-based commodities trading house with an equity injection, according to sources familiar with the talks.

Noble is discussing a possible strategic investment, according to a statement on Tuesday that didn't refer to Sinochem.

"No binding arrangements have as yet been entered into with respect to this possible transaction and, accordingly, there can be no assurance that this transaction will be concluded," it said.

The conversations between the State-owned oil and chemicals group and the Hong Kong-based trading house are still at an early stage, the sources said.

Sinochem is understood to be interested in the international energy trading business of Noble, which includes oil, coal and natural gas.

Noble Chairman Richard Elman said last year that the company was looking for a strategic investor after it raised $500 million in fresh equity in June.

"A strategic partner is still very possible," said Elman, who is due to stand down later this year. "But it has to be at the right time and the right candidate."

Noble feels it's now in a stronger position to negotiate a deal for a strategic investor, with its equity price stabilizing and bond prices rising strongly, according to one source.

The yield of Noble's bond maturing in 2020 fell last week below the key 10 percent level for the first time in more than a year, compared with an all-time high of more than 35 percent in January 2016.

Sinochem didn't reply to phone calls and emails.

Noble has been fighting to prop up its finances after a torrid 2015 and 2016 during which its share price collapsed.

Bloomberg