Noble probe: Timing matters less than thoroughness

SINCE the probe into commodity trader Noble Group was jointly announced by Singapore's top securities and accounting watchdogs and white-collar crime buster for suspected breaches of securities rules and company law, the timing of the announcement has drawn some reproach.

If not for the investigation, New Noble's listing would have taken place today, perhaps, to some cheer. A relisting of the revamped firm under a US$3.5 billion debt rescue plan that had already endured many months of the rough and tumblewould hopefully mark a "fresh" and "clean" start for the ailing firm.

But amid the stress of the investigations, the Hong Kong-based company said on Sunday night that the restructuring effective date has been pushed back by two weeks to no later than Dec 11. It didn't provide a fresh timeline for the listing of New Noble shares but it is understood this will follow closely on the heels of the revamp's completion.

The troubled firm was days away from closing its do-or-die debt deal when the Commercial Affairs Department (CAD), the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (Acra) announced their joint investigation last Tuesday following an extensive review.

The latest development is unfolding more than three years after Noble's practices have been in the crosshairs of critics and governance advocates; the trader has had to frequently deny allegations of shortcomings amid a precipitous fall of its market value by the billions since 2015.

Too little, too late, say some of Noble's harshest critics.

"Why now, when Noble is most vulnerable?" asked Iceberg Research's Arnaud Vagner, Noble's earliest and most persistent critic.

"Now, the fire trucks are arriving ... wonderful. Too late for the shareholders, bond holders and employees whose savings and careers went up in flames," said Michael Dee, another ardent critic of Noble who was once chief executive of Morgan Stanley's business in Southeast Asia and a former senior managing director at Temasek Holdings.

The detractors are, perhaps, missing the wood for the trees.

The regulators' timing for launching the probe matters less than its thoroughness of investigation. Naturally, those who have a personal interest in Noble will hope that the investigations can be speedily concluded.

A prolonged probe will add more uncertainty to a saga that has lasted too long and has bruised market confidence.

Whether New Noble - an asset- light and Asian-focused commodity firm that will be 70 per cent owned by senior creditors, 20 per cent by equity investors and 10 per cent by management - can make a come-back under a new business strategy was never certain even prior to the latest development.

Truth be told, post major asset divestments and restructuring, there isn't much left of Old Noble in the revamped entity. For that reason, other observers say the investigations are not likely to have much implications on the prospects of New Noble, which they reckon remains bleak on the back of thinning margins and high finance cost.

To be sure, the cloud of investigation is an additional headache that New Noble's management can do without.

Where does this leave Noble's long-suffering minority shareholders who voted in favour of the restructuring largely because it was their only hope, short of an insolvency? Will they feel more emboldened to seek legal recourse for their investment losses, backed by the weight of a formal investigation by the authorities?

After Noble's debt deal won favour at a pivotal shareholders' meeting in late August, the adhoc group of senior creditors who are poised to become the revamped company's largest shareholders had described the plan as a "massive endeavour" and "one of the most complex, sophisticated and high-profile restructurings".

This deal still has a fair chance of pulling through, going by Noble's latest statement that it still has the backing of creditors.

In addition, Singapore's Securities Industry Council has extended a key waiver as the debt deal has been pushed back, which could further suggest that the authorities do not intend to block the restructuring.

That being the case, there is less at stake now than if the authorities had acted earlier when the rescue plan to prevent Noble's total collapse was on the line.

Seen in this light, those who continue to champion Noble's revival - including the diehard minority shareholders who did not sell out when they had the chance - may be glad that the investigations had not come sooner.