Noble still in search of strategic investor

While Mr Elman says Noble is still on track to raise US$2 billion (S$2.7 billion) by cutting jobs, selling shares and assets and even holding back cash from profitable parts of the business, the search for a new investor shows the lengths it is still
While Mr Elman says Noble is still on track to raise US$2 billion (S$2.7 billion) by cutting jobs, selling shares and assets and even holding back cash from profitable parts of the business, the search for a new investor shows the lengths it is still prepared to go in the pursuit of new capital.PHOTO: REUTERS

This is because return to profit may take up to two years; founder says it has to be right candidate and at right time

HONG KONG • Noble Group is still seeking a strategic investor as the founder and chairman of the embattled Asian commodities trader says it will take as much as two years for a return to profit.

"A strategic partner is still very possible," Mr Richard Elman, who is due to stand down as executive chairman by next June, said in an interview at the company's headquarters. "But it has to be at the right time and the right candidate."

Noble is battling to prop up its finances after a torrid 19 months, during which its share price collapsed amid attacks on its accounting and the first yearly loss in almost two decades.

While Mr Elman says the company is still on track to raise US$2 billion (S$2.7 billion) by cutting jobs, selling shares and assets and even holding back cash from profitable parts of the business, the search for a new investor shows the lengths it is still prepared to go in the pursuit of new capital.

The company has longstanding ties with Chinese state-owned entities, including China Investment Corp (CIC), China's sovereign wealth fund and one of Noble's largest shareholders. In a June rights offer that raised US$500 million, CIC took its full allocation of shares and got a second seat on the board.

In another fund-raising move, Noble last year sold its remaining 49 per cent stake in the Noble Agri business to China's Cofco Corp for US$750 million in cash.

"The equity raising was the best solution, but it wasn't easy," said Mr Elman, 76, declining to comment further on the potential new investor.

He founded the business in 1986 after a career that began as a teenage scrap-metal labourer in England and included senior positions in legendary trading house Philipp Brothers.

Noble's shares have fallen 56 per cent this year after a 65 per cent collapse last year. They rose as much as 6.3 per cent to 13.5 Singapore cents yesterday.

Noble has saved several hundred million dollars by exiting what it says are low-margin areas, such as European power and gas and some metals trading. It is selling its once- core Noble Americas Energy Solutions business in a deal it hopes could raise about US$1.25 billion.

Noble has reduced overhead costs this year by about 20 per cent, saving US$100 million, according to Mr Elman. Headcount will be about 1,000 by the end of this year, down from 1,500 a year earlier.

He painted a difficult path ahead as the company returns to its roots as a smaller trader with fewer assets.

After posting a second-quarter net loss of US$54.9 million and an increase in net debt, Noble said its priority is boosting cash flow ahead of earnings. It made a loss of US$1.7 billion last year after taking write-downs of US$1.9 billion.

"We don't want to be the biggest. We want to be nimbler, smarter, smaller. The process to get (Noble) to the right size and to profitability will take between one and two years," Mr Elman said.

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A version of this article appeared in the print edition of The Straits Times on September 20, 2016, with the headline 'Noble still in search of strategic investor'. Print Edition | Subscribe