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Noble issues open letter, refutes Michael Dee's claims
NOBLE Group on Wednesday issued an open letter to one of its fiercest critics, Michael Dee, former chief executive for South-east Asia at Morgan Stanley and a former Temasek senior managing director.
Said Noble in a media release, which summarised the four-page open letter by its chief executive, Yusuf Alireza: "Noble Group does not have off-balance sheet repos as Mr Dee has falsely claimed. Noble does execute, on a limited basis to manage our inventory levels, optional inventory sales. These are not considered repos by IFRS and are categorised as true sales. While this is the case according to current accounting rules, if for any reason those rules changed, Noble would have no problem taking those deals onto its balance sheet. It uses inventory sales to a limited extent only and the inventories are readily marketable inventories which can easily be turned into cash."
The group added that it has responded to all questions raised, contrary to Mr Dee's published statements. "These responses have been given in a variety of forms, including directly to stakeholders such as banks and core shareholders, who have been satisfied with the answers," said Noble.
It added: "Noble Group does not overvalue Yancoal on our balance sheet as Mr Dee has repeatedly alleged. Noble values its associate stake using a cash flow model rather than a market price because an 8 per cent free float, A$15,000 average daily trading volume, and 5x share price rise in two months, are not the characteristics of a liquid and transparent stock price. Noble's valuation approach is reasonable and consistent with practice in the mining industry and accounting policies."
Noble's letter follows an open memo on May 29 by Mr Dee to Noble's staff to pressure its management to answer the questions that have been raised about the company.
Mr Dee later also called on Noble's founder and chairman Richard Elman to resign, saying that he had lost credibility with investors given the fall in its share price, compared to gains in the Straits Times Index, in the past five years.
Said Mr Alireza: "Up to now I have chosen to ignore your ill-informed opinions. However, your recent call for the resignation of our founder and chairman is a step too far."
Noble, whose stock has been hit by attacks on the group's accounting policies, announced on Tuesday that it had made market acquisition the day before of close to 12.98 million shares for about S$9.22 million, averaging 70.87 Singapore cents apiece. This marked its third buyback this month, with such share repurchases now totalling S$42.9 million in value.
The commodity firm's shares have been under pressure since February, following questions raised by critics about its accounting practices and amid a weak outlook for commodities.
Noble came under heavy criticism by little-known research firm Iceberg Research, which claimed that the commodity group's assets were inflated.
The stock, which has slumped more than 40 per cent since Iceberg's first report, is now trading at lows not seen since March 2009, data from Bloomberg showed.
Noble shares were last traded at 70.5 Singapore cents apiece as at 9.36am; Iceberg's price target for Noble is 10 Singapore cents a share.