SINGAPORE (BLOOMBERG) - Shares of Singapore-listed Noble Group jumped when trading opened on Wednesday (Dec 16) after Asia's largest commodities trader said that it was in advanced talks to sell the rest of its agriculture unit, potentially bolstering its drive to raise cash and avoid a credit-rating cut to junk.
The shares rallied as much as 12 per cent to 43.5 Singapore cents and traded at 42 cents at 9.24am after Noble said late on Tuesday that the company is talking with potential purchasers about a 49 per cent stake in Noble Agri Ltd. Cofco Corp, China's largest food company, is one of the potential buyers, according to a person familiar with the matter. Cofco officials did not immediately respond to e-mails or texts seeking comment.
Noble Group has said it plans to raise US$500 million (S$703 million) through asset sales to bolster its balance sheet.
Standard & Poor's and Moody's Investors Service said this quarter that they may reduce the company's credit rating to junk if the liquidity position does not improve. The stock has lost 63 per cent this year as commodity prices slumped and short-seller Muddy Waters and a group called Iceberg Research criticised Noble's accounting.
Cofco already owns 51 per cent of Noble Agri, which it bought last year for US$1.5 billion. Noble is seeking about US$750 million for the stake and could get further compensation depending on how the agribusiness performs, said the person, who asked not to be identified because the talks are private.
Noble chief executive officer Yusuf Alireza said in August that while the company will do what is needed to support the investment-grade rating, it is not required for the business. After Moody's announced the ratings review, Noble said that it is confident of meeting that assessor's targets.
A Singapore-based spokesman for Noble declined to comment beyond the company's statement.