Noble's CEO defends its operations ahead of AGM

Finances are sound and there's no hurry to raise capital, he says

THE boss of Noble Group has defended the firm's operations and accounting processes in the face of ferocious criticism from Iceberg Research and short-selling outfit Muddy Waters.

In an exclusive interview with The Straits Times yesterday, chief executive Yusuf Alireza, 44, said the commodity giant's finances and the quality of its balance sheet are sound.

"Has what Iceberg and Muddy Waters said made us question our business model? Not at all," said Mr Alireza, who joined Noble in 2012.

"There's nothing that happened in the past three months that made us change our minds about our business model or governance around financial processes. Our balance sheet has never been stronger or more liquid, with US$5.2 billion (S$7.1 billion) of liquidity headroom as of the end of last year.

"That's more than our entire outstanding debt. And we are the most under-leveraged as we've ever been as a firm, with a debt to capitalisation level at 38 per cent."

He added that the company is in no hurry to raise capital through rights issues or to seek stronger institutional backing.

Mr Alireza's comments come ahead of Noble's annual general meeting (AGM) today, one likely to be dominated by the Iceberg allegations that began in February.

These in essence accuse the firm of overstating fair value estimates and fabricating paper profit to hide mounting debt and cash flow issues.

The accusations gained traction after Noble's full-year results announcement on Feb 26, when the company announced impairments of US$438 million. These included US$200 million for its minority-owned Australian coal miner Yancoal, which Iceberg has cited as proof of asset over-valuations by Noble.

Muddy Waters joined the fray on April 8, announcing plans to short the shares while accusing the firm of existing "solely to borrow and burn cash".

Iceberg ratcheted up the pressure this week by releasing 15 questions it wants shareholders to throw at Noble at the AGM today. These range from criticisms of Noble's financials to the credibility of Mr Robert Chan as an independent director, given that he has been in the position for 19 years.

Mr Alireza rubbished the claims, saying: "Coal prices have dropped from US$150 to US$50 per tonne. Show me one mining company that hasn't impaired assets on a quarterly or annual basis. Were these companies lying too?"

He added that "we have categorically rejected these short-seller reports as inaccurate and misleading... I look forward to challenging Iceberg's statements in the public court of law".

Noble filed a suit on March 23 against Mr Arnaud Vagner, whom it has identified as the person behind Iceberg.

But Mr Alireza admitted that there is scope for the management to be more transparent, even if it comes at a cost.

"It's a world where running your business well is no longer enough. If being transparent gives our private competitors an edge over us, that's the price we're ready to pay."

At the same time, he said the firm is keen to move on and get back to business. "It is my intention to draw a line under the last two months and focus firmly on running our business and delivering results, which is the only way to silence our critics."

whwong@sph.com.sg