Noble issues 1 for 1 rights issue at steep discount; Elman to step down in a year's time

NOBLE Group, before the market opened on Friday morning, requested for a trading halt and announced changes to its board of directors and a US$500 million rights issue.

The reason cited for the trading halt - effective with immediate effect - was the release of an announcement.

Noble said separately in an announcement to Singapore Exchange that at the request of the group's founder and chairman Richard Elman, the board will set up a sub-committee to examine options for his succession.

The subcommittee will be chaired by David Eldon, who is a non-executive director, and will identify a successor to assume the role of non-executive chairman. Mr Elman wishes to step down as executive chairman within the next 12 months, said Noble.

In recognition of CIC's support for the company, CIC will be entitled to a second non-executive director, in addition to the current appointee that it has on the board, Noble added.

The group will also seek to appoint an additional independent non-executive director with a background in international commodities and futures trading.

Last week, Noble announced that its former chief executive officer Yusuf Alireza has resigned with immediate effect. He will be replaced by co-CEOs - executive director William Randall and president of Noble Americas Jeff Frase.

In the SGX announcement, Noble said that it has approved a fully underwritten rights issue with net proceeds of approximately US$500 million.

The rights issue, together with the sale of Noble Americas Energy Solutions announced last Monday and the previously announced sale of low return assets and working capital reduction measures will, in aggregate, generate US$2 billion in additional liquidity over the next 12 months.

This liquidity, said Noble, will be available to further reduce net debt, and will also significantly improve the group's financial flexibility. It also "follows through" on Noble's earlier commitment to raise US$1 billion in liquidity by the end of 2016, the group said.

The rights issue will comprise one rights share for every one share in Noble Group held, issued at S$0.11 per share. The price represents a discount of approximately 63 per cent to the closing price of S$0.300 per share on SGX on June 2 - being the last trading day of the Noble Group shares prior to the announcement of the rights Issue, and a discount of approximately 46 per cent to the theoretical ex-rights price of S$0.205 per share.

"These actions will provide us with the financial flexibility to capture the growth opportunities that exist within our asset light business model. Furthermore, we are also announcing an expanded cost reduction programme, which is in addition to previous cost reduction efforts announced," added the commodity trader.

The programme will comprise the sale of ownership stakes in selected low returning assets, and the continued reduction of working capital in low return businesses globally. Noble also confirmed the continuation of an operating cost reduction programme with a focus on reduction in headcount following its exit from low-returning businesses and assets, among others.