Noble Group rejects Goldilocks' request for non-disclosure waiver, explains sale processes

NOBLE Group, in its public spat with a majority shareholder, has rejected Goldilocks Investment Company's request for Noble to waive the non-disclosure arrangements around their earlier discussions.

The battered group, in an announcement on Monday morning, also provided more details about its sale processes for Noble Americas Corp (NAC) and Noble Americas Gas and Power Corp (NAGP), and said its disposals over the last two years have all complied with listing rules and applicable laws.

Abu Dhabi-based Goldilocks, which owns 8.1 per cent of Noble, had requested for the waiver after accusing Noble of taking one exchange between the companies out of context in the company's announcement on Jan 31.

It said it was unable to comment or elaborate further on these circumstances due to the non-disclosure arrangements, and wrote formally to Noble to waive them so that it may present a complete picture.

In its response on Monday morning, Noble maintained that its earlier announcement was "accurate and not misleading".

"In view of the extensive and confidential information shared with Goldilocks under the non disclosure agreement, the board is not aware of any reason that would justify Goldilocks' release from non disclosure of confidential information and therefore has not acceded to Goldilocks' request," it said.

It also provided further details regarding the sales of its largest assets, in response to Goldilocks' letter on Jan 29.

Goldilocks, in a 17-page letter last week to Singapore regulators asking them to investigate the group, had asked why Noble's sales of its businesses and assets had been done at steep discounts to their book value.

The fund said that despite its having highlighted these concerns to the board, the company had neither given a satisfactory explanation of the sale processes nor said whether safeguards were in place to ensure that the assets were disposed of at fair value. These raised questions of whether the board has been negligent in the sale process, or deliberately undervalued the transactions, said Goldilocks.

Noble said on Monday that the disposals had been undertaken under "distressed circumstances" after the group's shock first-quarter loss last year, following which its board met its bankers and concluded the group needed to reduce debt as quickly as possible.

The group was required to complete the sale of complex assets in a relatively short time, and under a certain degree of oversight by its creditors to ensure that the sale processes were "expeditiously executed", said Noble.

The company added that both the sale processes of NAC and NAGP were "competitive processes conducted over several months". These followed a conventional two-stage auction process, involving contacting multiple potential buyers, and were subject to oversight and reporting by financial advisers working for the NAC borrowing base facility base facility agent bank. Noble was also advised by a US law firm.

The group's illustrative consideration of US$248 million when announcing the disposal of NAGP was eventually lowered to US$168 million because accounts receivables were converted to cash which reduced its outstanding debt under the NAC borrowing base facility as well as changes to its mark-to-market positions due to market volatility.

For NAC, which carried a price of US$582 million in the disposal announcement that was eventually lowered to US$400 million, the decrease in proceeds reflected the long period of six months till transaction close.

While Noble had expected to complete the deal before the end-2017, it encountered delays in obtaining anti-trust approvals in various Latin American countries.

"This business in particular was burdened by significant fixed costs in terms of storage, pipeline and other contractual commitments as well as employee costs required to maintain the business until closure occurred," it said. Such operating expenses between signing and closing the deal were borne by the group.

Noble said its comments on Monday "materially address" Goldilocks' questions over the disposals. "The company believes it is inappropriate to discuss, in a public forum, its disposals over the last two years, all of which have complied with the listing rules and applicable laws," it added.

Noble on Sunday also said it has agreed to hold a townhall gathering with shareholders to be hosted by the Securities Investors Association Singapore (Sias) once the restructuring has advanced.

In a statement released on Sunday by the minority investor advocacy group after they met with Noble chairman Paul Brough on Friday, Mr Brough said he and the board "remain committed to an open and ongoing dialogue with shareholders".

He also said he retains the necessary independence to supervise the company's restructuring, according to the statement.

Noble's shares last closed at 22.5 Singapore cents on Friday.