Noble founder to step down as exec chairman

Noble founder to step down as exec chairman

Noble Group ended the week with more major announcements - founder Richard Elman is stepping down as executive chairman and the firm is raising US$500 million (S$688 million) in a rights issue.

This came after the commodities giant said on Monday that chief executive Yusuf Alireza was leaving.

Mr Elman will step down within the next 12 months, the company said in a statement, but did not say whether he would remain as a director or in an advisory role.

Mr David Gerald, president of the Securities Investors Association of Singapore, said in a statement that Noble chief financial officer Paul Jackaman had told him yesterday: "Mr Elman is not exiting the business. He is merely announcing that he will be stepping down as executive chairman."

Noble said non-executive director David Eldon will chair a sub- committee to identify a successor as non-executive chairman.

Meanwhile, the firm is launching a fully underwritten one-for-one rights issue.

Combined with the previously announced sale of Noble Americas Energy Solutions and some low-return assets, as well as Noble's working capital reduction measures, the rights issue will help generate US$2 billion in additional liquidity over the next 12 months, the firm said.

The funds will further reduce debt and "significantly improve the group's financial flexibility".

In a conference call with analysts yesterday morning, new co-CEOs Jeff Frase and William Randall highlighted the company's strength in businesses such as thermal coal and petrol, stressing that it has a growing presence in Asia-Pacific.

"With the additional liquidity and de-leveraging of the balance sheet, Noble Group will be very well positioned to focus on these franchises, take advantage of all opportunities available to us in the market and deliver the returns that we're capable of," said Mr Frase.

The rights shares will be issued at 11 cents apiece, a discount of about 63 per cent on the closing price of 30 cents on Thursday.

Mr Elman is taking up 625.5 million of the rights shares, while second-largest shareholder China Investment Corp will subscribe to 630.6 million shares and take up a second seat on Noble's board.

Analysts from Deutsche Bank Markets Research said the move could be a "game changer" for the firm, whose credit rating has been slashed to "junk" status by several ratings agencies.

"We... feel that this should halt Noble's negative rating momentum," the analysts noted yesterday.

"In fact, we wouldn't rule out the possibility of an upgrade if Noble continues to deliver on the pledged liquidity initiatives."

Long-time Noble investor Mano Sabnani told The Straits Times that he felt the firm had "no choice" in both moves - Mr Elman's resignation and the rights issue.

"Noble is too big a group to be run by a founder-chairman. As executive chairman, Mr Elman has always been the No. 1 in control of the firm, followed by the CEO, so Mr Alireza's resignation was not such a major move. Noble needs a clean slate and a new person right at the top."

This article was first published on June 4, 2016.
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