Noble share prices rally as it hints of suitors

It tells SGX it has been approached by some parties regarding financing, strategic options

Noble's hint that there may be a white knight with deep pockets waiting in the wings sent its stock up 1.5 cents or 3.3 per cent higher to 47 cents yesterday.
Noble's hint that there may be a white knight with deep pockets waiting in the wings sent its stock up 1.5 cents or 3.3 per cent higher to 47 cents yesterday.PHOTO: REUTERS

Noble Group shares enjoyed a modest rally yesterday on news that a white knight may be in the wings with financing, as the beleaguered commodity giant continues to battle a volatile share price and criticisms of poor financials.

Noble hinted that possible suitors could be at hand, in an announcement to the Singapore Exchange yesterday.

As vague as it was, the news was enough to galvanise investors, who sent the stock up 1.5 cents or 3.3 per cent higher to 47 cents yesterday. The rise came as a welcome relief after a 12 per cent drop on Thursday last week triggered a query and "trade with caution" warning from the SGX.

CMC Markets analyst Nicholas Teo said the mere mention of an interested investment or financing partner is positive for Noble's shares. "The massive sell-down last week was due to a mix of overreaction and month-end rollover, but the talk about these interested parties - even if they do not lead to any actual deal - sends the message that the company is nowhere near as messy as its free-falling share price reflects," he said.

"This is likely enough to make short-sellers rethink their position on Noble, which may see some share price recovery in at least the coming days."

  • Monitoring by SGX

    The SGX said in a separate announcement yesterday that it will closely monitor developments in Noble and its shares. It responded to Noble's claim that misleading information was spread to manipulate the share price: "We stand ready to take action against any market misconduct, including any suspected manipulation, and will work with the relevant authorities as appropriate."

In its announcement to the SGX, Noble said: "The board would like to make the market aware that management has been approached by a number of parties in terms of potential financing, and strategic and/or investment options.

"While there can be no guarantee that any transaction will occur in the near future, management and the board are committed to maximising the value of Noble for its shareholders and stakeholders.

"We will keep the market informed as appropriate."

A company spokesperson declined to reveal anything more to The Straits Times beyond the announcement's details.

Talk of a major institution coming to Noble's rescue - potentially via a takeover - has repeatedly surfaced since the company came under attack over its accounting and governance.

Some pundits have compared Noble's situation to Olam's.

The latter, also a commodity firm, warded off short-selling attacks in 2012 after a unit of Temasek Holdings acquired a controlling stake in the company.

Noble has continued to refute allegations that it is in financial trouble. It said in its SGX announcement yesterday that it will provide additional disclosures regarding the valuation of Yancoal and inventory sales, two areas that critics have focused on, amid allegations of accounting fraud.

The information will be made available on Aug 10 when Noble

announces its second-quarter results and the findings of a busi-ness model review conducted by accounting firm PwC.

The date has been brought forward by three days so that Nobel can address the allegations as soon as possible.

The company also stressed that its business performance is on track, noting that its performance for the three months to June 30 is "satisfactory" based on management accounts, with positive operating income and profits, even as net fair value gains dropped.

Said Noble: "Contrary to malicious rumours questioning our ability to fund the US$735 million (S$1 billion) bond redemption due on Aug 4, in fact the company has ample funds to do so and will still thereafter have readily available cash of well over US$1 billion."

It added that it still has around US$15 billion in bank lines.

A version of this article appeared in the print edition of The Straits Times on August 04, 2015, with the headline 'Noble share prices rally as it hints of suitors '. Print Edition | Subscribe