Decision day for Noble Group shareholders in agri deal vote

[SINGAPORE] Noble Group Ltd shareholders are expected to approve the sale of the company's stake in its agricultural unit on Thursday as the commodity trader seeks to revive its fortunes by cutting debt, bolstering investor confidence and regaining its investment-grade credit rating.

Stockholders will attend a special general meeting in Singapore to vote on the sale of the 49 per cent holding in Noble Agri Ltd to Cofco Corp for at least US$750 million. China's top food company already owned the other 51 per cent, bought for US$1.5 billion in 2014.

Noble Group has extended losses in 2016 after Standard & Poor's joined Moody's Investors Service in cutting the company's credit rating to junk, deepening the challenges facing Chief Executive Officer Yusuf Alireza. The trader said this month that it's confident the deal will be approved, and will help its rating metrics to exceed those required for investment-grade credit. The meeting offers executives an opportunity to address shareholder concerns and chart a way forward amid the commodity rout.

"The major shareholders are in support of the deal," said Carey Wong, a Singapore-based analyst at Oversea-Chinese Banking Corp who rates the stock as a hold. "Everybody's talking about the rating agencies. That is one of the near-term measures they can use," he said, referring to the stake sale.

Chairman and founder Richard Elman, who's bought Noble Group stock at least nine times in the past year, remains its biggest owner. He holds about 22.28 per cent of the company, ahead of China's sovereign wealth fund, which owns 9.65 per cent, according to data compiled by Bloomberg.

Noble Group's shares closed at 27.5 Singapore cents on Wednesday, taking losses this year to 31 per cent, the worst performer on the benchmark Straits Times Index. The stock sank 65 per cent last year as raw materials fell, and the company's accounting and finances were challenged by Muddy Waters LLC and a group called Iceberg Research. Noble Group rejected the claims and pledged to boost transparency.

Elman said he planned to make Noble Group into a smaller, more nimble company, according to comments to Reuters earlier this month in which he forecast that the commodity cycle was bottoming. Plans to bring new investors into the company were taking time, Elman said, according to the report.

Cash proceeds from the sale of the Noble Agri stake will be used to repay debt, the company said in a statement on Dec 23. The transaction will result in a non-cash loss of US$546 million, or the difference between the sale price and carrying value of the asset as of Sept 30, the company said.

BLOOMBERG