AMID the continuing tussle between Noble Group and Muddy Waters, shares in the commodity trader rose 3.5 per cent after it gave a more detailed rebuttal.
The stock closed at S$0.89 after another day of heavy trading that saw 96.2 million shares worth S$82.9 million changing hands.
But with Muddy Waters planning a counter-rebuttal, Noble's troubles are not over yet. In an eight-page statement released on Friday morning that addressed Muddy Waters' allegations one by one, Noble said: "We categorically reject their allegations as inaccurate, unreliable and misleading."
The US short-seller had said in a report on Thursday that "Noble seems to exist solely to borrow and burn cash".
Noble said its balance sheet has "never been stronger", and that its cashflows had been negatively affected by its strategic shift to become asset-medium heavy in the late 2000s.
The investments into assets, however, were recouped when Noble sold a 51 per cent stake in Noble Agri, generating cash proceeds of US$3.4 billion, the firm said.
Noble's shares had fallen as much as 9 per cent on Thursday after Muddy Waters published its report, and eventually ended the day 5.5 per cent lower.
Muddy Waters' attack came after little-known outfit Iceberg Research published three reports criticising Noble's accounting practices and debt levels.
Iceberg's estimate that Noble's debt levels are as much as US$3 billion over what is reported between the release of quarterly results - a claim that was repeated by Muddy Waters - was a "gross exaggeration", Noble also said on Friday.
While it acknowledged that its intra-quarter debt could be higher, as it could tap the available liquidity it had to absorb short-term commodity price volatility, additional debt levels could fluctuate up to US$1 billion.
The higher interest financing costs it pays is due to its "extremely conservative" debt maturity level and liquidity headroom levels, Noble said.
Muddy Waters also questioned how Noble had bought Indonesian coal miner PT Alhasanie (ALH), sold it to two Indonesian lawyers, and later bought it again through a subsidiary, booking negative goodwill and fair value gains each time.
Noble said that these transactions were due to changes in foreign ownership laws for coal mines in Indonesia.
"The acquisition and disposal proceeds of PT ALH and the accounting of them are fully explainable through arms lengths commercial arrangements and third party independent valuations," it noted.
Muddy Waters responded to Noble's rebuttal on Twitter shortly after, saying that the latter's reply was "massively misleading". It will also counter with a "full rebuttal" of its own. "We can already tell it will be fun," it added.
An analyst BT spoke to said Noble's response did not answer some key questions, such as why its cashflow continues to be negative. "There are a lot of rebuttals but it's not really dramatically different from what they've said before. It doesn't really answer much."