Noble CEO resigns in surprise move

Mr Alireza (main photo) had been with Noble for four years. His CEO position will be shared by Mr Randall (top) and Mr Frase (above).
Mr Alireza (above) had been with Noble for four years. His CEO position will be shared by Mr Randall and Mr Frase. PHOTO: REUTERS
Mr Alireza (main photo) had been with Noble for four years. His CEO position will be shared by Mr Randall (top) and Mr Frase (above).
Mr Alireza had been with Noble for four years. His CEO position will be shared by Mr Randall (above) and Mr Frase. PHOTO: NOBLE
Mr Alireza (main photo) had been with Noble for four years. His CEO position will be shared by Mr Randall (top) and Mr Frase (above).
Mr Alireza had been with Noble for four years. His CEO position will be shared by Mr Randall and Mr Frase (above). PHOTO: NOBLE

Analysts do not expect company strategy to change, with both new chiefs coming from within

Mr Yusuf Alireza, chief executive of beleaguered commodity trader Noble Group, yesterday stunned the market by resigning with immediate effect, citing family reasons.

In a separate announcement, the mainboard-listed group said it is about to start the sale process for its electricity trading unit Noble Americas Energy Solutions - "expected to generate both significant cash proceeds and profits to substantially enhance the balance sheet".

Investors did not react well to the news, with Noble shares slumping 2.5 cents or 8.2 per cent to close at 28 cents. They have shed a hefty 30 per cent so far this year.

Mr Alireza, 45, a former Goldman Sachs banker, had been with Noble for four years.

Noble has been battling a commodity price slump and allegations of accounting inaccuracies since February last year when it was accused by Iceberg Research of overstating its assets by billions of dollars, a claim it has rejected.

This February, it reported its first annual loss in nearly two decades, battered by a US$1.2 billion (S$1.6 billion) writedown for weak coal prices. The counter was knocked out of the benchmark Straits Times Index after its share price slumped 65 per cent last year.

The group said Mr Alireza has "helped guide Noble through a very challenging period", moving it towards an asset-light model, selling its Noble Agri business and re-financing its debt.

"With this transformation process now largely complete, Mr Alireza considered that the time was right for him to move on."

Mr Alireza holds some 27.1 million Noble shares. Data from ShareInvestor shows he bought five million shares on March 5 last year at $1.0058 apiece, which means he has taken a loss of at least $3.6 million on the shares.

Mr Alireza will be replaced by executive director William Randall and Noble Americas president Jeff Frase. They will share the CEO title.

Hong Kong-based Mr Randall began his career with Noble in Australia in February 1997, establishing coal operations, mining and supply chain management businesses.

Mr Frase, based in the US, joined Noble from JP Morgan in New York where he was managing director and global head of oil trading.

Prior to JP Morgan, he spent 17 years at Goldman Sachs as a managing director and global head of crude oil and derivatives trading.

Noble chairman and executive director Richard Elman said: "I am delighted Will and Jeff will be leading Noble Group's operations as we embark on the company's next chapter. Their complementary commodities expertise and geographical focus will be hugely valuable as we position ourselves for the future."

Analysts agreed the move was unexpected but said the group's strategy will likely remain the same.

"The details around the leadership transition are still quite sketchy. But the co-chief executives are from within the company, so they have a good understanding of the business," OCBC Investment Research analyst Carey Wong told The Straits Times.

"What's most important for the new management is to continue beefing up their balance sheet and improving liquidity," he added.

"The potential sale of its US energy solutions business is a move in the correct direction, in line with its strategy to become asset light."

A Moody's Investors Service note said the change in management has "no immediate impact" on the company's negative rating outlook.

"The change in management does not change the drivers of the negative outlook, which reflects uncertainty regarding the company's ability to rebuild and reposition its operations to improve profitability, cash flow and liquidity amid the prolonged commodity down cycle."

But Mr Nirgunan Tiruchelvam, director of research at Religare Capital Markets in Singapore, believes the management changes are "less relevant" than the company's value proposition, saying: "We are bullish on the stock. It is trading at a vast discount to its book value."

A version of this article appeared in the print edition of The Straits Times on May 31, 2016, with the headline 'Noble CEO resigns in surprise move'. Print Edition | Subscribe