Noble Group, the commodity trader struggling to avoid a default, has set out why it received millions of dollars less from the sale of its North American gas and power unit than it had previously indicated, responding to queries from the Singapore Exchange (SGX).
The figures differed because the unit's working capital shrank, cutting the amount that needed to be paid by Mercuria Energy Group, Noble said in a statement yesterday.
The illustrative sum given earlier also did not take into account funds that were placed in escrow, it said.
The Hong Kong-based trader is under intense scrutiny from investors and regulators as it pursues a shrink-to-survive strategy, selling off businesses to pay down debt. As part of that, Mercuria paid Noble US$102 million (S$139 million) for the gas and power unit and deposited a further US$83 million into an escrow account.
Noble had estimated it would be paid US$261 million for the business based on its end-June accounts, and SGX had asked the company to reconcile the difference between the figures.
The difference between the closing amount and the illustrative total consideration was a result of "a decrease in North American Gas and Power's working capital between March 31, 2017, June 30, 2017, and Sept 30, 2017", the company said. Also, the illustrative total consideration did not take into account the funds placed into escrow, it added.
Noble's shares ended 2.53 per cent lower to close at 35.5 Singapore cents.
The lower sale figure is a blow for Noble as it bids for survival more than two years into a crisis marked by accounting criticisms, a plunge in its securities and rating downgrades.
The company had already flagged a potential US$133 million loss on the unit's disposal based on its estimated sale price of US$261 million, compared with the book value of US$394 million at the end of June.
According to a circular to shareholders in August, US$40 million of the total sale price would be deposited into an escrow account when the deal was completed, unless the two companies disagreed on the valuation.
In that case, Mercuria would deposit a higher amount in escrow to make up for the difference.
Noble is still pressing on with the sale of its oil business.
Separately, people have said that Noble has struck a deal with Mercuria to tap about US$400 million of financing for its Asian business.
BLOOMBERG
