SINGAPORE (May 15): Noble Group, the commodity trader battling for survival after losing almost $5 billion in 2017, will report 1Q18 earnings on Tuesday after market close.

Iceberg Research, the stock research outfit that first raised questions about Noble's accounting methods three years ago, has put up six questions on its website for Noble’s management to answer at the conference call following the results announcement.

Iceberg insists Noble’s debt-for-equity restructuring plan has "zero chance of success”. Instead, creditors should use the threat of liquidation to demand tougher conditions to safeguard their interests, Iceberg reasoned.

Iceberg in 2015 alleged Noble was substantially overvaluing its assets. The company was also under-reporting its debt and over-valuing its contracts, Iceberg had alleged in its subsequent reports.

The attacks triggered a share price collapse in Noble, followed by credit downgrades and writedowns, as well as fund-raising and management changes.

Here are Iceberg's six questions

1 Noble’s chairman, Paul Brough, and its founder, Richard Elman, believe that the “new Noble” post restructuring will be more successful than the “old Noble”, now insolvent. However, the new Noble looks a lot like the old Noble: same management, same director (Elman), about the same financing costs. Noble will continue to suffer from a lack of financing lines: the US$700 million ($936 million) contemplated trade line is not a financing facility, but a letter of credit facility. How can the new Noble be more successful than the old Noble if they fundamentally are the same company?

2 Banks had to recognise heavy provisions because of Noble. Does management think the credit committees of these banks will accept financing the new Noble if the same executives remain in place? How can Noble survive and succeed as a commodity trader without these lines?

3 The most controversial aspect of the restructuring plan is the legal release. This clause would release Nobles’ managers and directors from claims of fraud or malfeasance. Not a single time, Noble has publicly explained why this clause is justified. What benefit does this clause bring to Noble’s stakeholders? How does it contribute to the financial restructuring of Noble? Does management fear lawsuits from existing or past securities holders who have suffered economic loss?

4 Most of bonds interest won’t be paid in cash, but “paid in kind” or “paid if you can”. Does this mean that management already expects that the new Noble won’t be able to pay interest? If Noble is unable to pay interest, will there be any cash left for shareholders and perpetuals holders? What does it mean for the value of these securities?

5 The ad hoc group is made of hedge funds that are known for buying debt of distressed companies at a cheap price and restructure this debt in a way that strongly favours them. All the restructuring specialists we talked to expect these funds to sell their exposure to the new Noble as soon as possible after the restructuring is completed. Does it mean that the price of Noble’s securities will fall even more?

6 Noble is still engaged in a lawsuit against us that they have not yet dropped. As everybody knows, Noble has zero chance of winning this lawsuit: all our arguments have been confirmed in their own financial statements. We were informed by our lawyers that any restructuring that would thwart or hinder our ability to recover our legal costs by transferring assets to a new entity would be potentially void and reversible under section 60 of the Conveyancing and Property ordinance. In other words, we at Iceberg can reverse the restructuring plan proposed by Noble. Did Noble’s management inform its stakeholders of this quite ironic situation?