Serious Noble Group Near Collapse

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Noble Group Ltd. shares extended their slump to the lowest since 2003, ahead of a one-week period that’ll see the commodity trader’s new rights-issue stock begin trading and the company report quarterly earnings.

The shares lost as much as 8.3 percent to 12.2 Singapore cents and closed 0.8 percent down at 13.2 cents in the city-state. On Tuesday, the stock sank 18 percent, drawing a query from the exchange, and Hong Kong-based Noble Group said it was unaware of the reason for the move.
Two-Day Loss

The stock has lost 19 percent over two days, with about 319 million shares traded on Wednesday, after 336 million changed hands on Tuesday. That compares with a daily average of about 93 million shares in 2016, according to data compiled by Bloomberg. The one-for-one rights issue will see 6.5 billion new shares added.

After a turbulent 2015 that saw a plunge in its shares and the first annual loss in almost two decades, Noble Group is facing further challenges. The company has raised about $500 million in the rights issue to shore up its finances, with the fund-raising supported by Chairman Richard Elman and China Investment Corp., and the new shares are expected to start on the main board of the exchange on Thursday. It’s also seeking a buyer for Noble Americas Energy Solutions, an asset it once labeled as core.
‘Some Clarity’

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“Investors are jittery over Noble’s continued cash-raising activity, with some uncertainty over the potential sale of the North American energy business given the recent slip in oil prices,” said Terence Lin, assistant director of bonds and portfolio management at Singapore-based fund researcher iFast Corp. “The upcoming earnings season is likely to shed some clarity on that, but investors are also wary of some nasty surprises.”

The stock has tumbled 63 percent over the past 12 months as Noble Group had its credit-rating cut to junk, appointed co-chief executives to replace Yusuf Alireza and announced a series of asset sales. The company is scheduled to report quarterly earnings on Aug. 11, the first under the new leadership of Jeff Frase and William Randall.
Repay Borrowing

The rights shares were offered at 11 Singapore cents, and the company has said the theoretical ex-rights price is 21 cents. About 20 percent of the net proceeds will be used to repay borrowings, with the balance set for working-capital purposes, potentially including inventory financing and extending trade credit to counter-parties, according to company statements.

The planned sale of Noble Americas Energy Solutions has “already generated significant interest” from potential buyers, Noble Group has said. It’s appointed Morgan Stanley and HSBC Bank Plc to handle the disposal and aims to close a deal this half.


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