SINGAPORE (Dec 10): The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) have barred Noble Group from transferring its listing status to New Noble as part of its restructuring process. This comes after a “careful review” of the findings to-date from the ongoing investigations into the commodities trader and its Singapore-incorporated subsidiary Noble Resources International (NRI).
According to a joint statement by MAS, the Commercial Affairs Department (CAD) and SGX RegCo, the decision to block the New Noble listing arose from doubts about New Noble’s expected net asset value (NAV), specifically that it was potentially inflated.
In response, Noble is considering filing for insolvency in the UK, according to sources quoted by Bloomberg. This would entail the company going into administration there.
Iceberg Research, the first public critic of Noble, appears to welcome the latest developments. “There won’t be a Titanic 2 sequel after all,” it says in a Dec 6 tweet.
“It is clear that Singapore’s authorities are now serious and dedicated to seeking justice for Singapore’s investors and protecting her financial markets,” says Michael Dee, former CEO of Morgan Stanley’s business in Southeast Asia and a former senior managing director at Temasek Holdings.
Another critic, Alex Turnbull, managing partner of Keshik Capital and the son of former Australian prime minister Malcolm Turnbull, tells The Edge Singapore: “About damn time basically.”
Authorities in Singapore are investigating Noble for allegedly having made false and misleading statements, and breaching disclosure requirements under the Securities and Futures Act (SFA). The Accounting and Corporate Regulatory Authority (ACRA) is probing NRI for potential non-compliance with accounting standards under Section 201 of the Companies Act.
The authorities also noted that, after investigations started, Noble submitted a set of simulated financial statements to SGX RegCo that took into consideration the potential non-compliance with accounting standards as highlighted by ACRA in its letter to NRI dated Nov 20.
Those statements showed that, for the financial year ended Dec 31, 2017, New Noble’s NAV would be about 40% lower. Similarly, the NAV for the first quarter ended March 31 would be 45% lower. These adjustments are on top of the write-downs of more than US$2 billion made by Noble in FY2017, the authorities say. By comparison, Noble reported negative NAV of US$805.1 million as at end-FY2017 and US$906.4 million as at end-1QFY2018.
CAD and MAS are looking into other relevant areas in connection with the preparation and disclosure of Noble’s financial statements, including the valuation of commodity contracts and other related assets. “The findings arising from these investigations could potentially lead to a further erosion of New Noble’s NAV,” the regulators say in a statement. “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 Edge Singapore understands that investigations will go beyond Noble and NRI. Already, EY (Singapore)’s audit work on NRI for the financial years 2012 to 2016 is currently being inspected by ACRA. Key individuals, including Noble’s past and current board of directors and senior management, could also be brought in to assist in the investigations.
Noble’s troubles began in early 2015 when Iceberg Research put out a series of scathing reports on the company. Iceberg alleged that Noble used accounting loopholes, or aggressive accounting, in every component of its financials, including its income statement, balance sheet and cash flows. Iceberg also alleged that Noble routinely exploited the accounting treatment of its associates to avoid large impairments and to fabricate profits.
This story appears in The Edge Singapore (Issue 860, week of Dec 10) which is on sale now. Subscribe here