Noble Group says taking steps to bolster balance sheet, repurchases bonds to trim debt

Noble Group is taking measures to bolster its balance sheet at a time when the accounting practices of Asia’s biggest commodity trader are being questioned and commodity markets are caught in a slump, company executives said.

On Thursday, Noble announced the repurchase of portions of two bonds in a move to trim its debt. The company has repurchased $31.6 million of its 6.75 percent U.S. dollar fixed rate senior notes due 2020, representing about 2.6 percent of the total principal amount outstanding immediately before the repurchase, it said. Noble has also bought back $1 million of its 3.625 percent US dollar fixed rate notes due 2018, or 0.26 percent of the total principal outstanding.

“Right now for all of our stakeholders, whether it’s our bond investors, our shareholders, our banks – the most important message to deliver to the market and the most important priority – is the strength of our balance sheet and liquidity,” Noble‘s CEO Yusuf Alireza said.

Alireza, a former Goldman Sachs banker, was speaking soon after Noble‘s shareholders approved the sale of its remaining 49 percent stake in its loss-making agribusiness to China’s COFCO for $750 million.

Hong Kong-headquartered Noble was thrust into the spotlight a year ago when Iceberg Research published the first of three detailed reports on it, alleging it inflated its assets by billions of dollars by inaccurately representing the value of its contracts, a charge Noble has rejected.

Noble‘s shares have shed about three-fourths of their value over the past year to just $1.3 billion, hit by the commodity market slump and the accounting issues, prompting Standard & Poor’s and Moody’s to cut its credit rating to junk.

This has raised financing worries at Noble, which has about $2.5 billion worth of debt due this year, according to Thomson Reuters LPC data. Noble‘s bonds and credit default swaps are trading at depressed levels, but Alireza blamed this on illiquid markets.

“From a management’s perspective, from a board’s perspective, our No. 1 priority continues to be, to be cash flow positive and to decrease our debt,” he said.

“We’re in a position where we have the liquidity, but we are also in a position where we have the support of our banks to continue to fund our business,” Alireza added.

Some shareholders questioned Chairman and founder Richard Elman about Iceberg’s reports,Noble‘s shares, which are at 12-year lows, and its debt levels at Thursday’s meeting, which was attended by nearly 300 investors, but Elman urged them to ignore rumours and have faith in the company.

“What surprises us frankly is why everybody pays so much attention to a tweet. If the world is being reduced to tweets, I think we’ve all got a problem,” said Elman.

Also read:

Noble Group founder Richard Elman sees future as smaller, nimble & asset-light company

Fitch sole agency to give investment grade rating to Noble Group

Singapore: Noble Group chairman Elman increases holding as shares sink

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.