Noble resumes share buyback day after PwC report

Commodity trader Noble Group resumed buying back its own shares on Tuesday (Aug 11), a day after it released a report by PricewaterhouseCoopers (PwC) that said the Singapore-listed company had not breached accounting rules following a business model
Commodity trader Noble Group resumed buying back its own shares on Tuesday (Aug 11), a day after it released a report by PricewaterhouseCoopers (PwC) that said the Singapore-listed company had not breached accounting rules following a business model review.PHOTO: REUTERS

SINGAPORE - Commodity trader Noble Group resumed buying back its own shares on Tuesday (Aug 11), a day after it released a report by PricewaterhouseCoopers (PwC) that said the Singapore-listed company had not breached accounting rules following a business model review.

According to a filing made to the Singapore Exchange on Wednesday, Noble bought back 12.29 million of its shares, at 56 cents apiece, for $7.02 million.

Since the share buyback mandaraising funds from strategic investor te was obtained, Noble has bought back a total of 204.06 million shares, representing a 3.03 per cent stake. It can buy back up to 673.95 million shares.

On Tuesday, Noble shares jumped about 8 per cent when trading opened but finished in the red, in part because they were hit by China record devaluation of the yuan. Analysts said that overall sentiment on the firm has not yet improved despite management's recent push to rebuild public confidence. The stock closed closed two per cent lower at 57 cents, with more than 307 million shares traded.

Meanwhile, Reuters reported on Wednesday that Noble is considering issuing a convertible note to a strategic investor, quoting a person with direct knowledge of the situation. The source said Noble's shareholders and partners have urged Noble to make a deal that would strengthen its ties with a credible partner, a move that could possibly bring in new business.

Noble has been approached by investors interested in its commodities contracts, valued at US$4.1 billion, and it does not rule out the option of going private, the source added.

Reuters said that by issuing a convertible security rather than tapping shareholders for additional equity Noble would secure funding, avoid near-term dilution of its share value and offer the partner a cheap entry into the company, which has lost about 50 per cent of its market value since its accounting methods came under attack in February.

The report quoted bankers as saying China Investment Corp (CIC), Noble's second-largest shareholder which owns a stake of about 9 per cent, is a likely candidate. Noble's biggest shareholder is chairman and founder Richard Elman, who owns about a fifth of the company.

The Chinese sovereign wealth fund had cut its stake in Noble in September 2014 and has not made any public comment on the company since the accounting problems.

Earlier reports had said that Noble had hired deal maker and former Citigroup banker Michael Klein to advise it. Klein had helped broker merger talks between Glencore and Xstrata.