Noble Group completes restructuring plan, but still faces investigation in Singapore

Noble Group said on Thursday that it had completed its restructuring plan, bringing to an end a process that had once appeared Sisyphean, but the long-running drama over the troubled commodity trader was set to persist amid an investigation by Singapore authorities.

With the plan’s completion, substantially all of the company’s assets have been acquired by the post-restructuring entity, New Noble, it said in a filing to SGX on Thursday.

“Following the restructuring effective date, the company no longer has any material assets,” Noble said.

The senior creditor special purpose vehicle (SPV) now holds 70 percent of the shares of New Noble, while shareholders will hold 20 percent and the management SPV will hold 10 percent, Noble said.

Its existing notes have been cancelled and those, along with the existing perpetual capital securities, are expected to be delisted on Friday, Noble said.

New Asset Co. bonds, New Trading Co. bonds, New Trading Hold Co. bonds and the senior creditor SPV shares have been issued to creditors, Noble said. The perpetual capital securities exchange offer is expected to be completed on Friday, Noble said.

New trade finance facilities

New Noble will have US$800 million in new debt made available, via a new trading finance facility, a new hedging support facility and an increase trade finance facility, it said.

Joseph Swanson, senior managing director at Houlihan Lokey, which is a financial adviser to Noble’s Ad Hoc Group of Creditors, pointed to a positive outlook for New Noble.

“Between the new US$800 million trade finance and hedging facilities and a substantial deleveraging of the balance sheet, New Noble is well
positioned to play a leading role in the Asian hard commodities business going forward,” Swanson said in the statement.

Paul Brough, Noble’s chairman, who has said he will remain with the newly restructured entity until a suitable successor is found, said the completion was a significant milestone.

“It has been a long, and at times difficult, journey,” Brough said in the statement on Thursday. “However, throughout this journey I kept my conviction in the company’s underlying business and people,” he added, pointing to Noble’s “deep relationships with customers and suppliers.”

‘Significant uncertainties’ over New Noble?

Earlier in December, the Singapore Police Force, the Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) said in a joint statement that there were “significant uncertainties about the financial position of New Noble,” and the company therefore would not be allowed to transfer the listing status.

That was amid on-going investigations into Noble and its subsidiary, NRI, by the MAS, the Commercial Affairs Department (CAD) of the Singapore Police and the Accounting and Corporate Regulatory Authority (ACRA), the joint statement said.

On 7 December, Noble said it “regrets” that after 19 months of negotiations with stakeholders, including shareholders, creditors and regulators, the authorities’ have decided to disallow the listing-status transfer.

Noble also said that NRI disagreed with accounting positions taken by ACRA.

The company noted that the investigation has focused on NRI, with no current investigations of any individuals, and that its related to “technical accounting-related issues.” The MAS later said that it was looking into the roles corporate officers might have played in any breaches of the law.

In mid-November, ACRA, CAD and MAS said Noble was under investigation for suspected false and misleading statements and breaches of disclosure requirements under the Securities and Futures Act, while NRI was under investigation for potential non-compliance with accounting standards.

At the time, Noble said it would cooperate with the investigation, and then subsequently added that it would extend the timeline for its restructuring.

Responding to ACRA

On Thursday, Noble said it sent a detailed response to ACRA on 11 December with clarifications, explanations and answers to questions in ACRA’s 20 November letter.

“The company and New Noble will continue to cooperate fully with ACRA in relation to the Joint Investigation,” Noble said on Thursday.

“Following detailed advice from its accounting advisors, the company continues to hold the strong view that all of its financial
statements have been prepared in accordance with all relevant accounting standards,” it added.

Last week, Noble said it obtained the appointment of a court-appointed officer in Bermuda to implement its restructuring plan, adding that if it wasn’t completed, the company would be forced into a full liquidation process, resulting in no recovery for shareholders or holders of the perpetual capital securities, as well as “materially lesser recoveries” for its creditors.

Even without the listing, shareholders would still receive a 20 percent aggregate stake in New Noble, it has said previously, and Thursday’s filing provided instructions for holders of Noble’s shares to receive their allotment.

The joint investigation reignited a years-long drama over the troubled commodity trader just as it had appeared to be reaching an end.

Noble has faced a gamut of a once-anonymous critic, Iceberg Research, whose allegations of accounting issues had weighed its share price, as well as a prolonged commodity-price slump which sapped its earnings over a period of years.

The company also faced controversy over the twists and turns in its efforts to restructure into New Noble and leave behind much of its debt.

The long-running restructuring drama had appeared to be at an end last month, when Noble requested its shares be suspended from trade permanently. The shares closed at S$0.081 on that day, a far cry from their height of around S$18.14 touched in early 2011.

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