Thursday, May 24, 2018

"Try as you might, it's difficult to find a more depressing stock market story than Noble Group".

A couple of the FT's heavyweights (commodities editor, energy markets editor) tell a sad, sad (but potentially instructive) tale.
Via FT Alphaville:

Noble rot in a shrinking Harbour
Try as you might, it's difficult to find a more depressing stock market story than Noble Group.

Once Asia’s biggest commodity trader, the Singapore-listed company has left a trail of devastation for investors who bought into Richard Elman’s dream of building a Far East rival to Glencore.
From Singapore’s mom and pop investors on the light-touch SGX, to institutional buyers that probably should have known better, all have suffered serious wealth destruction as critics have savaged Noble’s accounting practices.

While the company has always defended its financial reporting since it first came under attack three years ago, it has nevertheless written down billions of dollars worth of paper profits linked to long-term supply contracts that were at the heart of the initial controversy. Some were linked to projects that had never got off the ground.

Seemingly unable to generate cash and saddled with large debts, Noble has spent the past 18 months fighting for its survival. Now it is trying to push through a debt restructuring deal that will hand control of what’s left of the trading house to group of hedge funds and banks - who are charging the company millions in fees for the privilege.

Noble, however, seems to have learnt very little from the three-year crisis, which was triggered by a string of devastating reports published by a former employee under the guise of Iceberg Research.
Results published last week show muddy accounting - legal under international standards but often with the effect of obfuscation rather than clarity - something that appears to be embedded in Noble’s DNA. The company and its management team, many of whom would retain plum roles after the restructuring, seems unable to help itself.

The first quarter numbers were, predictably, poor. It was another loss - this time $71m - accompanied by the usual claims that there is a slimmed-down business worth saving.
The loss, the company accounts showed, was an improvement on this time last year. Shareholders, they seemed to suggest, should be emboldened to vote through the convoluted debt-for-equity swap even if it leaves them with just a sliver of the restructured company.

But a close examination of the figures shows the downward trend at Noble’s core business remains firmly intact....MUCH MORE
From Trading Titan to Penny Stock: Noble Group Faces Crunch as Creditors, Investors Circle