SINGAPORE (Apr 6): Goldilocks Investment Company, which owns an 8.1% stake in commodities trader Noble Group, says the latter’s currently proposed debt restructuring plan is “doomed to fail” unless it is redesigned to address a number of “serious flaws”.

In a press statement on Friday, the Abu Dhabi-based fund starts off by applauding Singapore Exchange Regulation’s (SGX RegCo) announcement yesterday stating that how Noble shareholders vote should not affect their share entitlement in the new company under the group’s restructuring plan.

It also echoes SGX RegCo’s position that Noble’s senior creditors should reconsider the current restructuring proposal to ensure parity in the treatment of all shareholders.

See: SGX RegCo asks Noble creditors to reconsider restructuring proposal

“Goldilocks has been emphasising since Noble first announced its initial restructuring proposal on Jan 29 that its restructuring proposal must not be a plan that is formulated in an opaque process with one particular class of stakeholders, at the expense and to the direct detriment of Noble’s stakeholders generally,” adds the fund.  

Current RSA a ‘highly coercive restraint’

Further, Goldilocks says it believes Noble’s current restructuring support agreement (RSA), which the fund deems a “highly coercive restraint”, is doomed to fail unless redesigned to address serious flaws – beginning with what Goldilocks describes as legalistic and highly artificial devices deployed in the RSA.

“The use of artificial legal constructs in an effort to avoid key jurisdictions (such as Singapore) that are highly relevant to Noble will not be tolerated,” says the fund.

“These are not limited solely to shareholder coercion, but go to the very foundations of the RSA,” it adds, referring to its Mar 28 press statement commenting on the RSA’s terms that would not work, in its view.  

Goldilocks demands urgent release of 1Q18 financials

The fund also underscores Noble’s release of its 1Q18 financial statement as a matter of extreme urgency, and asks the group’s board members to redouble their efforts in ensuring that the urgent disclosure of the information is made.

“This is clearly permissible and falls squarely within the spirit of transparency that is the bedrock of the relevant rules of the Singapore Exchange listing manual. Goldilocks therefore calls upon the board to publish the 2018 1Q financial statements as a matter of extreme urgency. This needs to be a top priority of the board,” says Goldilocks.

“We also urge the members of the [ad hoc group of senior creditors] to use their tangible and obvious influence over the Noble board members to ensure urgent disclosure of this critical information. These disclosures need to be comprehensive and to include a full description and accounting for all professional and other fees paid and payable by Noble to financial and legal advisers and to all members of the [ad hoc group of senior creditors],” details the fund.

Concerns over Noble’s board of directors

Noble recently announced the resignation of its founder Richard Elman from his post as non-executive director on the board.

See: Noble Group founder Richard Elman resigns as non-executive director; cost of restructuring likely to match market cap

With regards to the changes to Noble’s board of directors of late, Goldilocks says this means the board no longer represents the group’s key stakeholders – giving way to concerns regarding the board’s vacancies left in the wake of Elman’s resignation.  

“Goldilocks is very concerned that the Noble board and the Nomination Committee appear to have made no effort to engage with shareholders to invite nominations or in any way to create a constructive dialogue with shareholders regarding vacancies on the board,” says the fund.

Noting that the board’s recently-appointed independent non-executive directors – Andrew Herd, Time Isaacs and Fraser Pearce – are all residents of the UK, Goldilocks further highlights their lack of prior experience as directors of a public listed company in Singapore.

“This leads to the inevitable conclusion that the appointments appear designed solely for the purpose of implementing Noble’s COMI Move to the UK, which is an artificial legal strategy and the dubious foundation of the RSA, and do not appear to be in the best interests of Noble,” states Goldilocks.  

Disclosure of dismissed proposals

Finally, the fund asks for Noble’s board to fully disclose the specific details of the rejected alternative proposals which were submitted to the board with the aim of providing for its ongoing trade finance facilities.

“The board members elected to dismiss all alternative proposals and to negotiate and agree a fatally flawed RSA and a materially less-favuorable trade financing arrangement with members of the [ad hoc group of senior creditors]. This begs the question – why?” says Goldilocks.

“Full, complete and urgent disclosure needs to be made and coherent justifications need to be provided by the Noble board and by the [ad hoc group of senior creditors] in this regard. It is time for the members of the [ad hoc group of senior creditors] to stand up and justify their conduct and actions to all other stakeholders.”