Noble Group 'sinking,' Iceberg says after company flags huge loss

The reception of Noble Group is seen at its headquarters in Hong Kong.
The reception of Noble Group is seen at its headquarters in Hong Kong.PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Singapore-listed Noble Group received a fresh broadside from Iceberg Research as the commodity trader's long-time foe predicted that the company will probably fail, while telling executives that the anonymous commentator will not be silenced by being sued.

"Noble is sinking in a perfect storm," the researcher said in a report on Thursday (Aug 3). "The company is walking toward bankruptcy and liquidation. Its cost of fund is prohibitive. Noble is losing the confidence of its counterparties and of its banks. Key traders are leaving."

An external media spokesperson for Noble Group declined to comment on the report when contacted by Bloomberg. Iceberg Research, which doesn't identify its analysts, has been sparring with the Hong Kong-based company for more than two years. The trader has repeatedly denied Iceberg's allegations.

Noble Group has been in a spiral of decline since 2015, marked by losses, concern it won't be able to pay its debt, and accusations leveled by Iceberg it inflated the value of some contracts, which the trader has denied. Last week, the company warned of a quarterly loss of as much as US$1.8 billion - including impairments of some hard-to-value contracts - and announced more asset sales. Moody's Investors Service says the risk of default remains elevated.

"Noble expects a massive loss of US$1.8 billion in its second quarter," Iceberg said, adding that all of the arguments it made against the company have now been confirmed. The company needs "billions from a new investor to repair its balance sheet and reverse its huge operating cash outflow."

The trader has lost more than 90 per cent of its market value since 2015, when its accounts and disclosure were first challenged by Iceberg. The trader has repeatedly rejected those claims, saying they're the work of a disgruntled ex-employee it had fired and embarked on ongoing litigation against him.

"The lawsuit initiated by Noble against us is ongoing, although progressing at an extremely slow pace," Iceberg Research said in the report. "One of the objectives of this lawsuit was to silence us. We don't write less when we are sued. We write more."

Iceberg also commented on the role of Singapore's financial market regulators in the report, saying that Singapore Exchange, which runs the stock exchange, and the Monetary Authority of Singapore, the country's de facto central bank, had failed to make adequate checks on Noble Group.

SGX spokeswoman Maynah Chin said she couldn't immediately comment on the report.