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Noble's AGM raises further concern

Chairman's reluctance to address issues triggers responses from Iceberg Research and SIAS
Tuesday, April 21, 2015 - 05:50
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NOBLE Group's annual general meeting (AGM) last Friday was an opportunity for the beleaguered commodity trader to address the serious issues raised by Iceberg Research and Muddy Waters, but the way it tried to rebuff shareholders' queries has raised further concern.

Singapore

NOBLE Group's annual general meeting (AGM) last Friday was an opportunity for the beleaguered commodity trader to address the serious issues raised by Iceberg Research and Muddy Waters, but the way it tried to rebuff shareholders' queries has raised further concern.

BT had earlier reported that Noble's chairman and its largest shareholder, Richard Elman, 74, had repeatedly dodged shareholders' queries on the group's accounting practices, instead steering the AGM's focus to the resolutions on Noble's financial statements and the reports of its directors and auditors.

This met with objections from some of its shareholders, who felt that the management was too defensive.

On Monday, it also triggered responses from Iceberg Research, which has since mid-February been launching several attacks on Noble's accounting practices, as well as local investors' watchdog, the Securities Investors Association Singapore (SIAS).

Iceberg said that Mr Elman's responses to shareholders reveal "insecurity and arrogance".

"In these amazing exchanges between a chairman and his own shareholders, we see that Richard Elman thinks he does not answer to anyone, not even to his own shareholders," Iceberg said in a statement.

At Friday's AGM, when Noble shareholder and veteran investor Mano Sabnani urged the group's management to elaborate on how it values its stake in Australian coal associate Yancoal - a key feature in Iceberg's attacks - Mr Elman tried to sidestep the issue. It was under further pressure from Mr Sabnani that Mr Elman eventually relented to answering the Yancoal question.

Iceberg said the AGM could have been the opportunity to be more transparent. Instead, "the man who has always been the real boss of Noble, showed his true colours".

In response to Iceberg's comments, a Noble spokesman told BT: "We received the overwhelming support of our shareholders and the Iceberg issue is now finished. Our focus is firmly on running the business to achieve our goal of becoming the leading mover of physical commodities in the world."

Meanwhile, SIAS president and CEO David Gerald said that Mr Elman could have given comfort to the anxious shareholders by answering in a manner, even briefly, acceptable to them.

"Much disappointment and anxiety could have been avoided by the chairman hearing out the shareholders. Shutting up the shareholders instead, only creates acrimony."

SIAS will be seeking clarification from Noble as to whether the concerns of shareholders as expressed in the media are correct and if so, why it happened.

Since Feb 15, the day Iceberg launched its first attack, Noble's counter has plunged about 27 per cent to S$0.885, despite an aggressive share purchase programme led by its management.

In the wake of recent events, analysts remain largely bullish on Noble. Of the 16 analysts covering the stock, 10 have a "buy" call while six recommend a "hold".

DBS Research released a report on Monday, which stated: "The stock shows firm resilience at 85 cents despite the recent allegations by Iceberg Research and Muddy Waters. From a technical perspective, we advocate accumulating the stock at its current level that is slightly above 85 cents."

On Monday, Noble also announced that its wholly-owned subsidiary, Noble Americas Corp, has acquired the equity interest in the issued unit capital of a Delaware company, MR Coal Marketing & Trading, for US$23.9 million. The commodity trader also announced that it had increased its stake in Australian company Crawley Resources Ltd from 70 per cent to 100 per cent.

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