Noble Group plans US$500 million rights issue as chairman Elman exits

SINGAPORE — Noble Group, the junk-rated commodities trader that lost its chief executive officer this week, approved a fully underwritten rights issue to raise about US$500 million (S$687.81 million) to bolster its balance sheet, as it announced plans for the succession of founder and chairman Richard Elman.

The Hong Kong-based company will offer 1 rights share for each existing share at 11 Singapore cents, a 63 percent discount from the close on Thursday (June 2), according to a statement to the Singapore exchange on Friday.

Of the total 6.54 billion new shares to be issued, Mr Elman has agreed to take 625.5 million and China Investment Corp, the country’s sovereign wealth fund, will take 630.6 million. CIC will get a second seat on the board.

Noble Group has endured another turbulent week after announcing the departure of CEO Yusuf Alireza on Monday, saying it planned to sell off a business, Noble Americas Energy Solutions, that less than a month ago he described as a core asset.

The trader is seeking a turnaround in its fortunes, selling off parts of the company and pledging inventories to secure debt. Over the past year, its shares collapsed and the company’s credit rating was cut to junk amid attacks on its accounting methods and the slide in commodity prices.

“The rights issue, together with the sale of Noble Americas Energy Solutions announced last Monday and the previously announced sale of low-return assets and working-capital reduction measures will, in aggregate, generate US$2 billion in additional liquidity over the next 12 months,” the company said.

At Mr Elman’s request, the board will set up a sub-committee to examine options for his succession, and will identify a replacement to assume the role of non-executive chairman, Noble Group said.

Mr Elman wishes to step down as executive chairman within the next 12 months, it said. The search will be led by Mr David Eldon, a non-executive director.

Noble Group’s shares climbed 5.3 per cent to close at 30 cents on Thursday after sinking to the lowest level since January following Alireza’s resignation. They’re still down 25 per cent this year after losing 65 per cent in 2015. The company asked that its stock be suspended from trade. BLOOMBERG