Noble Group Sees Billion-Share Trade Frenzy After Rights Issue

  • Commodity trader is scheduled to report earnings next week
  • Stock rallies on Thursday after two-day 19-percent retreat

Noble Group Ltd. rebounded in Singapore as the company’s new rights shares began trading on the exchange, extending a roller-coaster ride ahead of quarterly results next week that’ll shed light on the commodity trader’s performance, funding and plans for asset sales.

The shares rallied as much as 16 percent to 15.3 Singapore cents and closed at 14.5 cents after a two-day, 19 percent plunge. With about 13 billion shares now in issue after the one-for-one raising, a total of 1.05 billion were traded in the past three days.

After a turbulent 2015 as the company posted losses, was cut to junk and saw its shares routed, Noble Group is facing further challenges this year even after wrapping up the rights issue that raised about $500 million. The funding, which was supported by Chairman Richard Elman and China Investment Corp., will be used to repay borrowing and bolster operations. It’s announced plans to raise more capital, with the pending sale Noble Americas Energy Solutions, an asset known as NAES that it once labeled as core.

“We expect a strong rebound once the dust clears on the rights shares,” Nirgunan Tiruchelvam, an analyst at Religare Capital Markets in Singapore, said in a note received on Thursday with a target price of 59 cents. “The catalysts for the stock include successful disposal of the NAES business.”

New Leadership

The company is scheduled to report quarterly earnings on Aug. 11, the first under the new leadership of co-chief executives Jeff Frase and William Randall, who replaced Yusuf Alireza. The planned sale of NAES has “already generated significant interest” from potential buyers, Noble Group has said. It’s appointed Morgan Stanley and HSBC Bank Plc to handle the disposal.

The Financial Times reported on Thursday, citing people that it didn’t identify, that Noble Group is seeking a waiver for one of its debt covenants on $3 billion of credit facilities, with the consolidated funded debt-Ebitda ratio expected to rise above an agreed limit in the second and third quarters. Noble Group declined to comment, according to the report.

Trading in Noble Group stock has topped the 2016 daily average this week. On Thursday, about 399 million shares changed hands after volumes of 319 million on Wednesday and 336 million the day before. The daily average in 2016 is about 95 million, according to data compiled by Bloomberg.

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