Noble's restructuring plan leaves major shareholder Goldilocks upset; Sias calls for more equitable terms

THE details of Noble Group's restructuring plan have upset at least one major shareholder, who is calling on Singapore regulators to investigate the distressed commodity trader.

Abu Dhabi's Goldilocks Investment Company, which holds 8.1 per cent of Noble, on Tuesday complained to regulators that Noble's management seemed to have focused on their own interest in the new entity, over the interest of its existing shareholders and creditors, The Business Times understands.

Minority investor advocacy group Securities Investors Association (Singapore) (Sias) also stepped in on the same day, urging the firm to offer existing shareholders a similar deal as that to the management.

Noble said on Monday evening that a group of senior creditors, who represent about 30 per cent of its bonds and revolving credit facility, has agreed to swap their debt for a combination of new debt instruments and equity in the restructured group.

They will also provide the group with a three-year committed trade finance and hedging facility of up to US$700 million - on competitive market terms - for its commodity trading businesses.

The new company - which will hold all of Noble's businesses and assets (referred to as Topco) - will ultimately be 70 per cent owned by senior creditors, 20 per cent by the management and 10 per cent by existing shareholders.

Noble chairman Paul Brough said the in-principle agreement marked the "beginning of the final phase" of its restructuring, and creates a "new Noble".

Shares in Noble plunged on Tuesday, with the stock falling as low as 20 Singapore cents. It ended the day at 23 Singapore cents, down 11.5 per cent from its previous close.

Sias president and chief executive David Gerald noted that the main gripe by Noble's shareholders and noteholders is the steep cut in their shareholding, and favourable terms for the management.

"Creditors and shareholders would be scratching their heads as to why the special treatment for the management. What is the basis for the special treatment of the management?" he wrote in a press statement.

"There is a perception amongst shareholders and creditors that the management should take responsibility for the current predicament of the company."

He also asked why the restructuring cannot offer existing shareholders a similar deal as that was given to the management.

Sias had on Jan 25 asked Noble to provide answers to how the firm was getting the best price for its asset disposals.

Goldilocks, in its letter sent to the Singapore Exchange (SGX) on Tuesday, raised the same question, among others.

Despite highlighting its concerns to the board on how the sales have been made at steep discounts to their book value, the firm has not provided any satisfactory explanation of the sale processes, and whether there were any safeguards in place to ensure that the assets were disposed of at fair value.

These raise questions of whether the the board has been negligent in the sale process, or deliberately undervalued the transactions, said Goldilocks.

The fund, which entered into Noble only last year, also flagged a pattern of the timing of Noble's announcements on potential investors, and the corresponding share price spikes, some of which preceded capital raising exercises.

In addition, Noble's announcements of its asset disposals have carried sales price figures that were usually adjusted or reduced downwards upon completion, it noted.

Based on these, Goldilocks "believes that there are grounds for an investigation into Noble and its directors and management", it wrote in the letter.

The fund declined to comment for this article. An SGX spokesman noted that Noble's proposal is subject to the exchange's approval, and said it will consider in its review the compliance of the scheme with listing rules, and whether it is prejudicial to shareholder interest.

"In particular, SGX will ensure that the appropriate level of shareholder approval is sought to approve the scheme."

The exchange added that it will also require the company to respond publicly to the allegations in the letter by Goldilocks. "If the allegations are substantiated, we will take the appropriate regulatory action," she added.