SINGAPORE - Noble Group, which just this week replaced its chief executive, said its founder, chairman and biggest shareholder Richard Elman will step down within 12 months.
The Singapore-listed commodity trader, which is battling weak markets and the fallout from questions about its accounting methods, also said that is raising US$500 million in a fully underwritten one-for-one rights issue to reduce debt and improve liquidity.
Its shares dived 10 per cent after a trading halt on Friday morning was lifted at around 10 am. The counter was down 3 Singapore cents to 27 cents as of 10:28 am with 49.8 million shares changing hands.
"The rights issue has been proposed to form part of the company's ongoing and prudent balance sheet management and further enhance the financial flexibility of the group," said Noble in a statement to the Singapore Exchange on Friday (June 3).
The issue will be supported by Mr Elman and existing investor China Investment Corp (CIC).
The rights issue, together with the sale of Noble Americas Energy Solutions announced on Monday and the previously announced sale of low return assets and working capital reduction measures will, in aggregate, generate US$2 billion in additional liquidity over the next 12 months, said Noble.
This liquidity, will be available to further reduce net debt, and will also significantly improve the group's financial flexibility. It also follows through on its earlier commitment to raise US$1 billion in liquidity by the end of 2016, Noble added.
The rights issue will comprise one rights share for every existing share. The price is at a steep 63 per cent discount from the stock's close at 30 cents on Thursday.
Noble also confirmed the continuation of an operating cost reduction programme with a focus on reduction in headcount following its exit from low-returning businesses and assets, among others.
It set that Mr Elman wishes to step down as executive chairman within the next 12 months, and at his request, the board will set a sub-committee to examine options for his succession. This will be chaired by David Eldon, who is a non-executive director, and will identify a successor to assume the role of non-executive chairman.
In recognition of CIC's support for the company, CIC will be entitled to a second non-executive director, in addition to the current appointee that it has on the board, said Noble.
The group will also seek to appoint an additional independent non-executive director with a background in international commodities and futures trading.
Noble Group's shares climbed 5.3 per cent to close at 30 cents on Thursday after sinking to the lowest level since January following Mr Alireza's resignation on Monday. The shares are still down 25 per cent this year after sinking 65 per cent in 2015. Noble asked for its shares be suspended from trading on Friday.
Noble was accused in February 2015 by Iceberg Research of overstating its assets by billions of dollars, claims which Noble rejected. Since then, its market value has plunged by about 75 per cent to S$1.8 billion and its debt financing costs have risen after it lost its investment grade rating.