Noble fends off tough questions from shareholders at AGM

SINGAPORE — Loss-making Asian commodity trader Noble Group is prioritising maintaining liquidity and lowering debt while exploring various routes to raise capital, including roping in a strategic equity partner, said CEO Yusuf Alireza at the company’s annual general meeting (AGM) yesterday, amid tough questions from shareholders.

All 15 resolutions were passed at the AGM, but management faced questions on financials and transparency issues and some shareholders did not seem to be totally convinced by the company’s answers.

“The management tried to answer as much as it could but concerns remain over the company’s return to profitability given the high debt, high cost of debt, low margins and depressed commodity markets,” Mr Mano Sabnani, a shareholder in Noble, told TODAY after the AGM. He had asked the company to explain the viability of its business model and its strategy on pruning debt.

During the process of voting on the resolutions, Mr Sabnani was interrupted by Noble chairman Richard Elman but was allowed to resume questions after some shareholders raised an alarm and blocked the voting process.

Over the past year, Noble posted its first annual loss in nearly 20 years as it wrote down asset values amid the commodities slump and had its credit rating cut to junk by two ratings agencies.

The shares collapsed 65 per cent, making it the biggest loser on the Straits Times Index (STI) last year, and it was removed from the STI last month.

“It is important to not just look at one part of our debt structure but look at overall how we fund our balance sheet. There are certain parts going up but there are other parts where we are moving away from how we funded our business earlier to have much lower cost of funding,” said Mr Alireza.

The company said it has US$4.6 billion (S$6.27 billion) in potential liquidity sources against debt of US$3.2 billion, with its expected average cost of debt reduced to 3.9 per cent in 2016 from 5.3 per cent in 2013.

“It is less about commodity prices going up or down, but more about the volatility and competition in the market. In the current market environment we will have less competition with smaller players having more difficult times. If there is volatility in market, it is opportunity for us to make more money,” said Mr Alireza in response to queries on the future growth potential of the company given compressed margins.

Questions were also raised on the company’s ways of valuing its businesses, including its stake in Australian coal miner Yancoal.

Some optimistic investors in Noble, however, urged the company’s management to remain focused amid market headwinds and distraction caused due to sharp criticism from research outfit Iceberg.