Noble chairman's share buys boost his holdings to 22.13%

Mr Elman bought 10 million Noble shares last Friday for $3.19 million.
Mr Elman bought 10 million Noble shares last Friday for $3.19 million.

Noble Group chairman Richard Elman stepped up his defence of the commodity trader that he founded by boosting his stake after the stock sank to the lowest since 2008, the company's credit rating was cut to junk and analysts scaled back price targets.

Mr Elman bought 10 million Noble shares last Friday for $3.19 million, raising his holdings to 22.13 per cent, according to a statement to the Singapore Exchange yesterday. After news of the purchase, made at an average price of 31.85 cents, the stock fell as much as 8.8 per cent to 31 cents amid a region-wide drop in raw material shares.

Noble, which lost about two-thirds of its market value last year amid attacks on its accounts, has extended losses this year after Standard & Poor's joined Moody's Investors Service in cutting its rating below investment grade.

Over the past year, the Hong Kong-based company has sought to reassure investors by paring debt, selling assets and boosting transparency, with Mr Elman pledging to shareholders last June to "right the damage".

That defence has been undermined as China's slowdown hurts commodity demand and prices, prompting investors to shun raw material companies.

"Richard Elman is trying to say that he thinks this current bout of sell-off we're seeing is overdone," Mr Angus Nicholson, an analyst at IG Markets in Melbourne, said by e-mail. "Unfortunately, his actions are unlikely to really alter investor perceptions of the company. China demand fears are dominating trade in commodities-related companies," said Mr Nicholson.

A media representative for Noble declined to make an immediate comment on Mr Elman's purchase.

Mr Elman, a former scrapyard worker who dropped out of school at 15, built Noble into Asia's largest commodity trading company by revenue. He worked at another trader, Phibro, before setting up his own firm with US$100,000 in savings in Hong Kong.

He remains Noble's biggest share owner, ahead of China's sovereign wealth fund, according to data tracked by Bloomberg.

Mr Elman has bought stock at least eight times over the past year, raising his holdings as the company parried criticism of its accounts from a group called Iceberg Research, whose members operate anonymously, and attacks from short-seller Muddy Waters.

Noble Group executives, led by chief executive officer Yusuf Alireza, have made efforts to buoy the company's creditworthiness as its shares slumped. They agreed last month to sell the remaining 49 per cent of its agricultural unit to China's Cofco Corp for at least US$750 million (S$1.08 billion) to reduce debt. Cofco already owned the other 51 per cent.

Even after the deal was announced, S&P said liquidity, or short-term financing, was no longer strong enough to sustain Noble's investment-grade rating.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 12, 2016, with the headline 'Noble chairman's share buys boost his holdings to 22.13%'. Print Edition | Subscribe