Noble Group shares retreat to lowest since 2003 in Singapore

[SINGAPORE] Noble Group Ltd dropped for a second day in Singapore, slumping to the lowest price since 2003, ahead of a one-week period that'll see the commodity trader's new rights-issue stock begin trading and the company report quarterly earnings.

The shares lost as much as 5.3 per cent to 12.6 Singapore cents, before rebounding to trade little changed at 13.5 cents at 10:18 am in the city-state. On Tuesday, the stock fell 18 per cent, drawing a query from the exchange. Hong Kong-based Noble Group said it was unaware of the reason for the move.

Rights Issue

After a turbulent 2015 that saw a plunge in its shares and the first annual loss in almost two decades, Noble Group is facing further challenges this year. The company has raised about US$500 million in a one-for-one rights issue to shore up its finances, with the fund-raising supported by Chairman Richard Elman and China Investment Corp, and the new shares are expected to start on the main board of the exchange on Thursday. It's also seeking a buyer for Noble Americas Energy Solutions, an asset it once labeled as core.

'Some Clarity'

"Investors are jittery over Noble's continued cash-raising activity, with some uncertainty over the potential sale of the North American energy business given the recent slip in oil prices," said Terence Lin, assistant director of bonds and portfolio management at Singapore-based fund researcher iFast Corp.

"The upcoming earnings season is likely to shed some clarity on that, but investors are also wary of some nasty surprises."

Noble Group's 2020 bonds dropped 0.1 cent to 80.2 cents on the US dollar as of 9:20 am on Wednesday, according to Bloomberg-compiled prices. The notes have lost 5.9 cents over seven days, including a 4.2-cent drop on Tuesday that was the biggest since Jan 20.

The stock has tumbled 62 per cent over the past 12 months as Noble Group had its credit-rating cut to junk, appointed co-chief executives to replace Yusuf Alireza and announced a series of asset sales. The company is scheduled to report quarterly earnings on Aug 11, the first under the new leadership of Jeff Frase and William Randall.

Repay Borrowing

The rights shares were offered at 11 Singapore cents, and the company has said the theoretical ex-rights price is 21 cents. About 20 per cent of the net proceeds will be used to repay borrowings, with the balance set for working-capital purposes, potentially including inventory financing and extending trade credit to counter-parties, according to company statements.

Trade in Noble Group shares jumped on Tuesday as the stock sank and the exchange highlighted what it said was an unusual move. About 335.6 million shares changed hands yesterday, compared with a daily average of about 90 million in 2016, according to data compiled by Bloomberg.

The planned sale of Noble Americas Energy Solutions has "already generated significant interest" from potential buyers, Noble Group has said. It's appointed Morgan Stanley and HSBC Bank Plc to handle the disposal and aims to close a deal this half.

BLOOMBERG