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Noble says allegations of management enriching themselves at shareholders' expense 'unfounded'
RESPONDING to shareholders' unhappiness that Noble Group's management appeared to have focused on their interest over that of the company and the shareholders, the group said its management is essential to the company's business because its core businesses are heavily reliant on its people.
The allegations that its management is enriching itself at the expense of shareholders are "unfounded", the commodity trader said in an announcement on Wednesday.
The group of creditors represented at the restructuring negotiations had agreed to giving the management a 10 per cent equity interest in the restructured entity in order to retain them and align their interests with the future success of the company, it added.
"Any further grants will be subject to performance hurdles, will not vest if those hurdles are not achieved, and will be funded by loans from creditors that will need to be repaid before vesting."
Under the restructuring plan unveiled on Monday evening, the new company that will hold all of Noble's businesses and assets will ultimately be 70 per cent owned by these senior creditors, 20 per cent by the management and 10 per cent by existing shareholders.
The outsized equity stake that the firm's management will have in the restructured entity raised eyebrows, and led to at least one major shareholder, Goldilocks Investment Company, questioning whether the management has breached its fiduciary duty to the company and its shareholders.
Goldilocks, which owns 8.1 per cent of Noble, has sent a letter to the regulators asking them to investigate the company on this and other matters. These include whether the firm timed its announcements of strategic investors to boost its share price ahead of capital raising exercises, and whether its asset disposals have been conducted in a proper manner.
Noble said that many of the announcements were required by listing rules to address leaks, market rumours and media articles.
"The board is not aware that any of those leaks have come from the company or its management."
The board has also tried to maximise the value from all asset disposals during this period, it said. The firm explained that the consideration received was typically less than expected as competitors took advantage of the fact that Noble was a distressed seller; working capital and operating losses also led to subsequent adjustments in the final consideration price, and these factors had been disclosed when seeking shareholders' approval.
Goldilocks, which is based in Abu Dhabi, had purchased its shares in Noble in the secondary market unsolicited, and without any consultation or engagement with the company, Noble said.
While the initial private engagements with the fund had been "very encouraging", Goldilocks made it a pre-condition for them to be granted two seats at the board before any detailed talks over potential restructuring or investment options, according to the announcement.
"The board's nomination committee met to consider this request and was not comfortable acceding to this request, for corporate governance reasons. This was carefully explained to Goldilocks."
Noble said that the company had nevertheless continued to engage with Goldilocks and had given detailed briefings to the shareholder regarding the restructuring.
Noble said that it will issue a more detailed announcement in due course.
Shares in the firm rebounded on Wednesday after their 11.5 per cent fall on Tuesday, and traded at 25.5 Singapore cents, up 10.9 per cent from the previous close, as at 4.08pm.