Noble sinks further with shares at lowest since 2003

The company logo of Noble Group is displayed at its office in Hong Kong.
The company logo of Noble Group is displayed at its office in Hong Kong.PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Noble Group.dropped for a second day in Singapore, slumping to the lowest price since 2003, ahead of a one-week period that'll see the commodity trader's new rights-issue stock begin trading and the company report quarterly earnings.

The shares lost as much as 5.3 per cent to 12.6 Singapore cents and traded at 12.7 cents at 9:02 am on Wednesday (Aug 3). On Tuesday, the stock fell 18 per cent, drawing a query from the Singapore Exchange. Hong Kong-based Noble said it was unaware of the reason for the move.

After a turbulent 2015 that saw a plunge in its shares and the first annual loss in almost two decades, Noble is facing further challenges this year even as commodity prices rebound. The company has raised about US$500 million in a one-for-one rights issue to shore up its finances, with the fund-raising supported by Chairman Richard Elman and China Investment Corp. The new shares are expected to start on the main board of the exchange on Thursday.

The stock has tumbled 64 per cent over the past 12 months as Noble had its credit-rating cut to junk, appointed co- chief executives to replace Yusuf Alireza and announced a series of asset sales. The company is scheduled to report quarterly earnings on Aug 11, the first under the new leadership of Jeff Frase and William Randall.

The rights shares were offered at 11 Singapore cents, and the company has said the theoretical ex-rights price is 21 cents. About 20 per cent of the net proceeds will be used to repay borrowings, with the balance set for working-capital purposes, potentially including inventory financing and extending trade credit to counter-parties, according to company statements.

Trade in Noble Group shares jumped on Tuesday as the stock sank and the exchange highlighted what it said was an unusual move. About 335.6 million shares changed hands yesterday, compared with a daily average of about 90 million in 2016, according to data compiled by Bloomberg.