SINGAPORE (THE BUSINESS TIMES) - Just when long-suffering Noble shareholders see a glimmer of hope, Iceberg Research has poured cold water on the company's reported debt revamp.
Last week, a Debtwire report said the commodities trader had reached the framework of an agreement to restructure its US$3.5 billion worth of debt, with some issues to be worked through. Under the agreement, Noble's lenders and bond holders will be asked to swap their debt for equity.
In reply to the Debtwire report, Hong Kong-based Noble said on Thursday (Jan 25) that it had neither concluded any agreement for the restructuring of the debt, nor the sale of a controlling interest or parts of its business to a strategic investor or investors.
In an open letter to Noble's creditors, Iceberg urged them to reject the debt-for-equity swap. Instead, creditors should use the threat of liquidation to demand tougher conditions to safeguard their interests, Iceberg reasoned.
"Liquidation would mean that for the first time specialists from outside the company would have access to internal documents, emails, correspondence with the auditor, etc. Noble's secrets will inevitably rise to the surface and make litigation for fraud even easier," Iceberg wrote in a blog post on Saturday.
"Noble's management is forced to accept any condition imposed on them to avoid liquidation, even if the deal means (founder) Richard Elman or (co-chief executive officer) Will Randall's equity is completely wiped out."
Noble plunged into crisis in 2015 when Iceberg, an anonymous group, first accused the group of inflating its assets by billions of dollars through accounting malpractices.
The attack triggered a share price collapse, credit downgrades and writedowns, as well as fund-raising and management changes.
Noble has stood by its accounts, but its market value has fallen to S$330 million from the more than S$8 billion it commanded in February 2015.
Debtwire also reported last week that the proposed restructuring would entail Noble setting up a new company, in which employees would own stakes with the option to increase their shares if performance targets are met. Iceberg retorted that: "The same structural issues that have plagued this company will remain in the future."
A strategic investor could also enter after restructuring is completed, Debtwire reported. Chinese company Cedar Holdings Group was reported by Bloomberg to have made an approach to Noble shareholders.
Iceberg pointed out that this would not be the the first time that Noble is trying to reassure the market with the entry of a strategic investor.
"For example, the name of Sinochem was mentioned one year ago as a strategic investor when Noble was already in financial trouble. The short window of optimism brought by the Sinochem story allowed Noble to raise US$750 million (from the sale of junk bonds) and buy a few months time. The Sinochem deal never materialised," Iceberg warned.
Noble shares lost 4.5 Singapore cents, or 14.75 per cent, to close at 26 Singapore cents last Friday. More than 32 million shares changed hands.
