Noble Group sues ex-China customer to block bid to wind up unit

Noble Group has sued a former Chinese iron ore customer to stop any attempts to shut a Singapore unit over an alleged debt of US$102,718 (S$137,000). PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Mainboard-listed Noble Group, the commodity giant battling accounting critics, sued a former Chinese iron ore customer of ten-years standing to stop any attempts to shut a Singapore unit over an alleged debt of US$102,718.

Noble Resources International Pte has been granted an interim injunction by the Singapore High Court preventing Rizhao Zhongrui Native Produce Co. from winding-up proceedings, and is pursuing separate claims against the firm, Noble said in a statement. A closed hearing is scheduled for June 25.

The Chinese firm shouldn't be allowed to harass and "assert undue commercial pressure" with the threat of action, Noble Resources' global head of iron ore and special ores Timothy Gazzard said in court papers. Zhongrui said it suffered loss and reputational damage over poor quality iron ore it bought and that Noble was aggressive and unreasonable.

Noble Resources' "reputation and credibility would be in serious danger of being irreparably damaged," if Zhongrui isn't restrained from trying to wind it up, Mr Gazzard said in the court papers. Zhongrui's attempts may also trigger default provisions in banking and credit facilities, contracts with suppliers and customers and reflect negatively on parent Noble, he said.

The Singapore court case comes as Noble fights on a wider front against criticisms of its accounting practices. In Hong Kong, the trader is also suing a former employee, whom it claims is behind the anonymous group Iceberg Research, for spreading false information about the company. Noble in an open letter this week to critics, which included an ex-Morgan Stanley banker, defended its methods and valuations.

Zhongrui didn't respond to e-mails and phone calls seeking comments.

Disputes between the decade-long partners began last year according to court papers. After a few rounds of e-mail exchanges with lawyers from both companies, the Rizhao, Shandong-based company in April issued a statutory demand for the payment that resulted in Noble's lawsuit. A creditor can seek to liquidate a company if payment isn't made within three weeks after the demand.

Noble is financially strong and there's no suggestion that Noble Resources is insolvent, the commodity trader's lawyers wrote to Zhongrui on April 15, urging the Chinese company to withdraw its statutory demand or face legal action. The unit had a 76 per cent jump in net income to US$176 million in 2013 on sales of US$17.2 billion.

Zhongrui won't "lose any sleep" and will resist Noble Resources' claims, the Chinese firm's lawyers said in court papers.

Noble fell 4.9 per cent to close at 68 cents on Thursday. The stock has tumbled 44 per cent since Iceberg Research sparked debate about Noble's accounting with a series of critical reports from February. Standard & Poor's Investor Services on June 11 revised Noble's credit rating outlook to negative from stable.

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