Noble says to take 'alternative' restructuring process without transfer of listing to New Noble

SINGAPORE (Dec 7): Noble Group said it intends to go ahead and complete the restructuring by “an alternative process” without the transfer of the company’s listing status to New Noble.

The alternative may involve filing for administration in Britain after which creditors of Noble would be able to take control of the company. However, shareholders and perpetual bond holders are likely to be wiped out, analysts had noted when the option was proposed in Noble's restructuring circular.

Noble made the response on Friday morning after the announcement that the Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) last night that they will not allow the company’s listing status to be transferred to New Noble.

Singapore authorities block Noble Group's plans to transfer listing to New Noble on restructuring

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As the investigation had focused on technical accounting issues raised by Accounting and Corporate Regulatory Authority (ACRA), Noble said it intends to shortly provide a comprehensive response to the latter.

It also denied any specific individuals in the company was under investigation.

In Thursday’s announcement, MAS and SGX RegCo had concluded that there were significant uncertainties about the financial position of New Noble and that it would be “imprudent to allow the re-listing as investors will not be able to trade in New Noble’s shares on an informed basis”.

The authorities said the simulated financial statements show that the net asset value (NAV) of New Noble as at Dec 31, 2017, could be adjusted downwards by about 40%, and that the NAV as at Mar 31, 2018 could be adjusted downwards by about 45%. These adjustments would be in addition to the write-downs of more than US$2 billion ($2.7 billion) already made by Noble in FY2017.

In the latest response, Noble highlighted that the simulated financial statements had also demonstrated that applying ACRA's accounting positions would decrease the pro forma net loss of New Noble as at Dec 31, 2017 and March 31, 2018 by approximately 45% and approximately 99% respectively.

Among the accounting issues challenged by ACRA was Noble’s derivative treatment for variable marketing contracts. “The group’s position is that there is both a strong technical basis for fair value accounting and this methodology aligns with the group’s business model and risk management approach,” says Noble.

Noble also insisted its treatment of offtake agreements as derivatives, recognition of gains and losses, treatment of overhead costs and split between current and non-current assets were in line with accounting standards.

“While this is a very disappointing development in this protracted process, the board, having consulted with the Ad Hoc Group, intends to preserve value for all stakeholders by completing the restructuring in the form set out in the circular and the explanatory statement, other than the transfer of the Company’s listing status. In doing so, the Board, in discharging its fiduciary duties, may implement the restructuring through a court-appointed officer,” says Noble.