Shares in Noble Group fell as much as 23 percent to S$0.20 on Tuesday after the commodities trader struck a deal the creditors to restructure US$3.5 billion of its debt.
As per the agreement, the restructuring would be in exchange for 70 percent of the firm and leave its current shareholders with only 10 percent in the new group.
Noble said that a group of its senior creditors, who represent about 30 percent of its bonds and revolving credit facility, has agreed for the debt-for-equity swap.
The proposed restructuring will significantly reduce the debt to US$1.7 billion from US$3.4 billion, it said in a statement on Monday evening.
The new holding company will be 70 percent owned by senior creditors, 20 percent by the management, and remaining by existing shareholders.
The proposed restructuring includes a 3-year committed trade finance and hedging facility of up to US$700 million for Noble's commodities
"This agreement marks the beginning of the final phase of our restructuring, and the creation of a new Noble as a focused and appropriately financed Group set to capitalise on the high-growth
Asian commodities sector," Noble's Chairman Paul Brough said in a statement.
At 0215 GMT, Noble shares were down 7.7 percent to S$0.24 on the Singapore Exchange.