Noble Group faces crunch as creditors, investors circle

SINGAPORE: Just seven years ago, Noble Group was an US$11bil-plus Asian commodity powerhouse, trading everything from soybeans to oil. Now it’s worth barely US$80mil, rooted among Singapore’s penny stocks.

Noble has posted huge losses provoked by a lack of trade financing and market calls that went sour, while also whittling down a mountain of debt. On Tuesday, it reported a narrower first quarter loss than a year ago, although saying its performance was still beset by constraints on liquidity and trade finance.

Shareholder meetings and legal rulings over the next few weeks will decide whether it survives.

Amid accusations of false accounting levelled in 2015 by Iceberg Research, and a legal spat this year, a long slide in investor confidence has seen most of Noble’s market value wiped out. Noble has defended its accounting and is now trying to clinch a last-ditch deal with creditors and shareholders from which – if it succeeds – it will emerge a transformed company.

Noble is seeking approval to halve its US$3.4bil debt in return for handing over 70% of equity to senior creditors, mostly a group of hedge funds which calls itself the “Ad Hoc Group”. Under that plan, its headquarters will be in London, not Asia, no longer controlled by founder Richard Elman.

The deal would leave existing shareholders with just 15% equity in a company that has seen its share price fall from a peak of S$17.6 Singapore dollar (US$13.18) in 2011 to below S$0.1. Despite its woes, Noble has so far defied talk of its demise.

But to keep going, Noble needs a majority of its shareholders to approve the restructuring – a vote on the proposal is expected in June.

Scared by the prospect of total loss and lack of any alternate plan, the proposal could get enough support, company sources say.

Founder Elman, still Noble’s biggest shareholder with a stake of nearly 18%, would be given a board seat in the new firm.

Noble chairman Paul Brough, a restructuring and liquidation expert, has urged shareholders to support the deal, threatening a failure would result in insolvency and bankruptcy.

But leading the resistance is Abu Dhabibased Goldilocks Investment Co Ltd, which holds 8.1% in Noble.

Goldilocks has filed complaints and lawsuits against the restructuring plans, arguing they protect creditors at the expense of shareholders.