Photographer: Nicky Loh/Bloomberg
Noble Group Foe Iceberg Fires a Fresh SalvoBy and
Researcher claims trader’s balance sheet may not be ‘clean’
Company’s restructuring plan won’t solve weaknesses: Iceberg
Noble Group Ltd.’s long-time foe Iceberg Research made a fresh attack on the embattled commodity trader on Tuesday, saying that its balance sheet may still mask problems and that the company’s bid to restructure its obligations won’t lead to a turnaround.
“The problem with this company is not only that assets have been wildly overvalued. Some liabilities have probably been drastically undervalued,” Iceberg said in an open letter to the creditors of the Hong Kong-based company. “Don’t believe that Noble’s balance sheet is clean after they recognized billions of impairments.”
An external media representative for Noble Group declined to comment on the report. Over the years, Noble has consistently rejected the claims made by Iceberg, which doesn’t disclose the identity of the person behind it, but the company has since done much of what Iceberg predicted it would do. Noble Group is suing the man it claims is responsible, Arnaud Vagner, calling him a disgruntled ex-employee.
Once Asia’s largest commodity trader, Noble Group’s decline since 2015 has been marked by losses, concern it won’t be able to pay its debt, and accusations from Iceberg it inflated the value of some contracts. The company has taken massive writedowns and sold assets at a loss to raise funds amid a liquidity squeeze, while at the same time attempting to get creditors to agree to restructuring $3.5 billion in bonds and loans.
“This restructuring will not address any of the fundamental weaknesses that led to Noble’s collapse,” Iceberg said. “Noble is overly-optimistic on the valuation of the remaining assets that would back the newly issued bonds,” the researcher said, adding: “The company will continue to burn cash or generate minimum operating cash flow.”
Noble Group’s shares sank further after the broadside from Iceberg, which came in the late afternoon. The stock slumped for the seventh time in eight days, losing 8.1 percent to close at 14.7 Singapore cents. That cut the trader’s market value to $145 million, down from a peak of more than $10 billion.
Noble Group has posted losses of more than $3 billion this year, largely due to a decision to write down the value of some of its assets. Chairman Paul Brough has warned that the company will probably have to incur further non-cash losses as it offloads more assets.
In its letter, Iceberg urged creditors to seek to have Noble Group’s senior managers replaced. The researcher also called attention to recent moves by the company to invest several million dollars in an obscure rare earths mining company, Mkango Resources Ltd.