Noble Group executives mapped out a road to recovery for the battered commodity trader as shareholders voted yesterday to approve the sale of a United States energy unit to raise funds, with chairman Richard Elman describing the asset as one of the firm's crown jewels.
Its shares rose.
The company hopes to be as profitable "as it was in the past" in the next one or two years, Mr Elman told a special general meeting in Singapore yesterday before shareholders voted in favour of the sale of Noble Americas Energy Solutions (NAES).
Percentage by which Noble Group's stock closed higher at 17.5 Singapore cents yesterday, paring the decline this year to 42 per cent.
Percentage by which Noble Group shares sank last year.
Co-chief executive officer Will Randall said that the unit became a non-core asset after Noble Group lost its investment-grade rating.
Noble Group has been divesting assets and cutting costs to bolster its balance sheet and restore investors' faith after a share price collapse, a full-year loss and the downgrade to junk status.
The company said in a presentation that the sale of NAES, which was announced last month, largely caps a drive to raise US$2 billion. The unit was previously described by former CEO Yusuf Alireza as a core holding.
Mr Elman said: "It is not the only crown jewel, it is one of the jewels we have.
"(The decision to sell) was taken because of market conditions, which not only affected Noble, but also affected everyone in the commodity business."
The unit will be sold to Houston-based Calpine Corp for US$800 million (S$1.1 billion) plus the repayment of working capital, which Noble Group has estimated to be an additional US$248 million.
The move follows a rights issue that raised about US$500 million, as well as the sale last year of the remainder of its agribusiness.
With the capital-raising initiatives, including the NAES disposal and rights issue, the company will "have more than enough liquidity to cover the upcoming maturities", chief financial officer Paul Jackaman told the meeting.
Noble Group had short-term debt of about US$2.3 billion as of June 30, compared with liquidity sources of US$2.5 billion.
Mr Randall, who runs the Hong Kong-based company with co-CEO Jeff Frase, said: "When we lost the investment grade, this went from core to non-core.
"We are trying to right-size Noble and get Noble prepared to move into the markets, which we expect to stay a certain way for many years."
Noble Group shares sank 65 per cent last year after they were hit by the collapse in commodity prices, its losses, and claims - rejected by the company - that its accounts were not fully reliable.
The stock closed 8 per cent higher at 17.5 Singapore cents yesterday, paring the decline this year to 42 per cent.
Morgan Stanley, which acted as an adviser in the NAES sale, has said the trader's refinancing needs will probably be US$325 million.
The bank's base scenario assumes Noble Group gets US$1.05 billion from the disposal, has US$500 million from the rights issue and lowers working-capital needs by US$400 million.