Noble founder Richard Elman resigns as non-exec director

Mr Richard Elman, who quit with immediate effect yesterday, founded the company in 1986.
Mr Richard Elman, who quit with immediate effect yesterday, founded the company in 1986.

Noble founder, non-executive director and chairman emeritus Richard Elman, 77, resigned yesterday with immediate effect. The resignation comes as Noble is facing pressure from its creditors and shareholders.

In a separate announcement yesterday, the commodities trading company said it intends to "vigorously resist" a lawsuit by major shareholder Goldilocks Investment accusing it of inflating profits to raise money. Noble said it had not been served with the writ and was unable to comment on the accuracy of news reports, but "the company believes the allegations in the lawsuit... to be unfounded and intends to vigorously resist them if served".

Mr Elman had retained a presence in the company he founded in 1986, even as he gradually gave up leadership roles over the years. He stepped down as chief executive at end-2009 and became non-executive chairman, though he struggled to hand over the reins - the group has had five chief executives in seven years.

He stepped down as chairman when restructuring specialist Paul Broughwas appointed to the position last year. The post of chairman emeritus was then created for Mr Elman.

Goldilocks Investment welcomed the resignation, calling it a "new dawn" for the firm, even as it raised questions on whether Mr Elman is entitled to any further payments.

"Despite lack of reasons, Mr Elman's resignation should be welcomed," it said in an e-mail statement. "It presents an opportunity for a new board composition which would greater protect stakeholder interest and transparency."

A board consisting of a majority of independent directors may lead to a fairer restructuring scheme, it said.

"Goldilocks has never been against the restructuring of Noble. Instead, it has consistently advocated for a better shareholders' value recognition instead of the continued payouts to the management team," it said.

"Goldilocks is assessing a possible new management team and will be looking to make proposals to replace the current ones."

Goldilocks' lawsuit against Noble comes after the Hong Kong-based company's credit ratings were downgraded by S&P Global Ratings, following missed principal and interest payments on bonds due on Tuesday.

According to a Bloomberg report, which cited documents filed in Singapore's High Court, Goldilocks is accusing Noble and its executives, including Mr Elman, of relying "on the inflated profits and balance sheet to raise capital through bond and right issues on the SGX (Singapore Exchange) and borrowing from financial institutions".

The 72-page filings claim Noble's management paid themselves inflated salaries, and attempted a cover-up, said Bloomberg. It said Goldilocks is seeking relief from Noble on behalf of shareholders, including some US$169 million (S$223 million) paid to executives between 2011 and last year, and interest and damages assessed by the court.

Another Bloomberg report said the cost of Noble's restructuring is likely to top US$100 million. The estimated price tag for advisers and other expenses, based on regulatory filings, is nearing Noble's entire market value of US$114 million as it pays creditors and foots much of the bill for the law firms, banks and consultants working on the restructuring.

Despite defaulting on its debt this week, Noble agreed to pay some of the multimillion-dollar fees by yesterday under a deal with creditors.

A version of this article appeared in the print edition of The Straits Times on March 22, 2018, with the headline 'Noble founder Richard Elman resigns as non-exec director'. Print Edition | Subscribe