No­ble Group CEO quits un­ex­pect­edly

The Pak Banker - - COMPANIES/BOSS -

No­ble Group's CEO Yusuf Alireza quit on Mon­day, a sur­prise move that comes just weeks af­ter he se­cured cru­cial fi­nanc­ing for Asia's big­gest com­mod­ity trader and raises ques­tions about its fu­ture strat­egy.

The em­bat­tled com­pany named its pres­i­dent Wil­liam Ran­dall, and Jeff Frase, global head of oil liq­uids, as co-CEOs and said it would be­gin a sale process for No­ble Amer­i­cas En­ergy So­lu­tions, which it had in­di­cated to be val­ued at over $1.25 bil­lion in Au­gust 2015. The changes are with im­me­di­ate ef­fect.

The sale move is aimed at boost­ing the bal­ance sheet of Sin­ga­pore-listed No­ble, which has been bat­tered since early last year by a bruis­ing ac­count­ing dis­pute and weak com­mod­ity mar­kets.

"The first task is to sta­bi­lize the situa- tion and con­vey sta­bil­ity and con­ti­nu­ity," said Nir­gu­nan Tiruchel­vam, an an­a­lyst at Reli­gare Cap­i­tal Mar­kets. "That would be the im­me­di­ate task of some­body in this busi­ness which has volatil­ity," he said.

No­ble was ac­cused in Fe­bru­ary 2015 by Ice­berg Re­search of over­stat­ing its as­sets by bil­lions of dol­lars, claims which No­ble re­jected. Since then, No­ble's mar­ket value has plunged by about 75 per­cent, or over S$6 bil­lion ($4.35 bil­lion), to S$1.8 bil­lion and its debt costs have risen as it lost its in­vest­ment grade rat­ing and bat­tled the worst com­mod­ity price rout in decades.

The shares shed 8 per­cent on Mon­day. Alireza, a for­mer Gold­man Sachs (GS.N) Asia co-head who joined No­ble four years ago, steered it into sell­ing as­sets and cut­ting busi­ness lines as part of a rad­i­cal trans­for­ma­tion to be­come a com­pany which did not own bulky as­sets.

With the trans­for­ma­tion process now largely com­plete, Alireza con­sid­ered that the time was right for him to move on, No­ble said. Alireza did not im­me­di­ately re­spond to a re­quest for com­ment.

Un­der his watch, No­ble made small in­vest­ments in com­mod­ity pro­duc­ers to se­cure mar­ket­ing and sup­ply rights, in some cases for as long as 20 years, ac­cord­ing to sources. The com­pany en­listed a team of quan­ti­ta­tive an­a­lysts to de­sign struc­tured trades and busi­ness mod­els in­volv­ing long term com­mod­ity con­tracts, sources fa­mil­iar with the sit­u­a­tion have told. Crit­ics have said the com­pany booked prof­its up­front on some of the con­tracts, which were based on over­ly­op­ti­mistic as­sump­tions about com­mod­ity prices. No­ble has de­fended its ac­count­ing poli­cies, and board-ap­pointed con­sul­tants Price­wa­ter­house­Coop­ers found it had com­plied with in­ter­na­tional ac­count­ing rules.

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