'Significant uncertainties' about financial position of New Noble: MAS, SGX RegCo

Late in November, Noble Group moved the deadline for its restructuring back by two weeks to address regulators' concerns.
Late in November, Noble Group moved the deadline for its restructuring back by two weeks to address regulators' concerns.PHOTO: REUTERS

SINGAPORE - Commodity trader Noble Group will not be allowed to transfer its listing status to New Noble as part of its proposed restructuring.

The Commercial Affairs Department, the Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) said on Thursday (Dec 6) that there are "significant uncertainties" about New Noble's financial position and that it would be "imprudent" to allow the re-listing.

"This follows a careful review of the findings to date from the ongoing investigations into (Noble Group) and Noble Resources International," the agencies added in a joint statement.

Noble had previously announced that its US$3.5 billion (S$4.8 billion) debt restructuring had received approval from English and Bermudan courts. It also suspended its shares from trading.

Late in November, the company moved the deadline for its restructuring back by two weeks to address regulators' concerns.

Allegations against Noble came to light about three years ago after an Iceberg Research report claimed that the trading house's long-term contracts were probably overvalued. It triggered a US$10 billion collapse in the firm's shares. Its market valuation fell to just $107.5 million.

"The authorities have been carefully reviewing since 2015 the allegations raised by various parties against (Noble Group) and following up on information and leads provided," said the Singapore authorities, which announced their investigation two weeks ago.

 
 

They added on Thursday that despite clean audit opinions issued by Noble's statutory auditors for financial years ended Dec 31, 2014, 2015 and 2016, they had continued gathering and reviewing information - including data relating to substantial write-downs that were announced in late 2017 and early 2018.

These provided the basis to start investigations into potential breaches of Singapore's laws.

During the investigation process, Noble submitted a set of simulated financial statements to show how New Noble's financial statements would be affected after considering the potential non-compliance with accounting standards that the Accounting and Corporate Regulatory Authority had highlighted in a letter to Noble Resources International in November.

"The simulated financial statements show that the net asset value of New Noble as at Dec 31, 2017, could be adjusted downwards by about 40 per cent," said the authorities.

This value, as at March 31, could be adjusted down by about 45 per cent, in addition to write-downs of more than US$2 billion already made by Noble in the 2017 financial year.

There could also be further reductions in the value arising from further investigations beyond non-compliance with accounting standards.

"(The Commercial Affairs Department) and MAS are looking into other relevant areas in connection with the preparation and disclosure of (Noble Group's) financial statements, including valuation of commodity contracts and other related assets," the statement said.

The authorities said the findings led MAS and SGX RegCo to conclude that there were significant uncertainties about the financial position of New Noble, adding "it would be imprudent to allow the re-listing as investors will not be able to trade in New Noble's shares on an informed basis".