Beleaguered Noble seeks strategic investor

Noble Group is seeking a strategic investor to drag the beleaguered commodities trader out of what it calls an "incredibly difficult environment".

The company's market value has shrivelled by over US$1 billion (S$1.38 billion) this year as the firm reported a first-quarter loss, S&P Global Ratings flagged a risk of default and Fitch Ratings cut its credit rating twice in less than two weeks.

As Noble works with Morgan Stanley and Moelis & Co to review its options amid the deepening crisis, potential investors will be scrutinising the company's remaining businesses after a torrid few years during which it sold off prized assets in an attempt to shore up its finances, including its North American power trading unit and agriculture arm.

They include petroleum storage in Panama, fuel transport via American pipelines, marketing rights to Indonesian coal and liquefied natural gas trading capabilities. The company also has stakes in Australian and Mongolian coal mines and an alumina refinery in Jamaica.

Following a revamp last year, which included the sale of its United States energy solutions unit, an exit from European gas and power as well as a reduction in its global metals business, the trader changed the way it differentiates its segments.

Under the new structure, Noble's energy segment comprises the oil liquids, gas and power, and energy coal units.

It had operating income from supply chains of US$27 million in the first three months of this year, compared with the group's loss of US$2.6 million, according to information taken from company reports, earnings statements and Noble's website.

As Noble works with Morgan Stanley and Moelis & Co to review its options amid the deepening crisis, potential investors will be scrutinising the company's remaining businesses after a torrid few years during which it sold off prized assets in an attempt to shore up its finances, including its North American power trading unit and agriculture arm.

In revenue terms, it accounted for about 90 per cent of total sales in the January-to-March period, according to available data, which was subject to change.

As part of the new structure, Noble's metals, minerals and ores business segment combines Noble's metals, carbon steel materials and logistics units.

It posted an operating loss from supply chains of US$29 million in the first quarter.

Noble's metals unit comprises its Asian base metals arm, trading copper, zinc, lead, nickel and other raw materials and its global aluminium business. Its Carbon Steel Materials unit focuses on providing raw materials such as iron ore, chrome, manganese and metallurgical coal and coke to mainly Asian steel mills. Noble does not own any production assets, according to the available data.

With offices in Hong Kong, Singapore, Mumbai, Beijing and London, Noble's logistics business services external customers as well as its internal freight requirements.

At any given time, Noble has more than 100 vessels on charter, either owned, bareboat, time charter period or single trips, the company said in its latest annual report.

Some of Noble's assets are held by the joint ventures and associated companies in which it has shares. These include Yancoal Australia, the miner majority-owned by China's Yanzhou Coal Mining, as well as mines in Mongolia and South Africa.

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A version of this article appeared in the print edition of The Straits Times on May 31, 2017, with the headline 'Beleaguered Noble seeks strategic investor'. Print Edition | Subscribe