Shareholders give green light for Noble Group's rights issue

Noble Group's rights issue won overwhelming backing from 98.87 per cent of shareholders at a special general meeting yesterday.

The Singapore-listed commodity trader said it was "extremely encouraged" by the outcome and that the rights issue is an important next step for the company.

Noble, which is battling weak markets and the fallout from questions over its accounting methods, announced earlier this month that it plans to raise US$500 million (S$677 million) in a fully underwritten one-for-one rights issue to reduce debt and improve liquidity.

With the go-ahead from shareholders, the firm said the renounceable underwritten rights issue will be carried out on the basis of one rights share for every one existing share held by entitled shareholders as at 5pm on June 30, at an issue price of 11 cents for each rights share.

More than 6.5 billion rights shares will be issued in the exercise.

Noble executive chairman Richard Elman said: "This rights issue is an important next step for the company and enables us to reposition our balance sheet as we move towards becoming a nimbler company."

The issue price represents a discount of about 63.3 per cent to the closing price of 30 cents per share on the Singapore Exchange on June 2 - the last trading day before the exercise was announced.

The rights issue is supported by Mr Elman, who is taking up 9.58 per cent of the new shares, while sovereign wealth fund China Investment Corp's subsidiary Best Investment Corporation has undertaken to subscribe its full entitlement, representing 9.65 per cent of the rights shares.

The issuance of new shares is part of measures to boost liquidity, cut debt and enhance Noble's financial flexibility.

"Together with other capital raising actions we have put into motion as previously announced, we are well on our way to achieving the optimum capital structure that will enable us to capture the best opportunities moving forward," Mr Elman said in the statement yesterday.

Noble said the gross proceeds from the rights issue will be about $718.9 million, with net proceeds estimated at around $696.1 million.

The net proceeds will be used for debt repayment, working capital and general corporate purposes.

Noble said it anticipates that about 20 per cent of the net proceeds will go towards the repayment of part of the group's syndicated loan facilities.

The commodity trader was accused by Iceberg Research last February of hiding losses and overstating its assets through the use of accounting loopholes - an accusation Noble rejected.

Iceberg's allegations sparked Noble's share price collapse.

The counter plunged around 60 per cent last year amid the commodity crash and Iceberg's accusations.

The commodities giant also lost its investment-grade rating with Standard & Poor's and Moody's.

Noble shares closed half a cent down at 21.5 cents yesterday following the announcement of the shareholders' support for the rights issue in the morning.

This article was first published on June 25, 2016.
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