Noble refutes Goldilocks claims, says management is essential to business

SINGAPORE - Noble Group rubbished the notion that its management is enriching itself at the expense of shareholders, calling these "unfounded" allegations.

Responding to shareholders' unhappiness that Noble Group's management appeared to have focused more on their own interests, the commodity trader said on Wednesday that its management is essential to the company's business because its core businesses are heavily reliant on its people.

Its shares, which opened at 22 Singapore cents, received a boost from the afternoon announcement, and ended the day at 25 cents, up 8.7 per cent from its previous close.

Noble said the group of creditors represented at the restructuring negotiations had agreed to give the management an initial 10 per cent stake in the restructured entity in order to retain them and align their interests with the future success of the company. "Any further grants will be subject to performance hurdles, will not vest if those hurdles are not achieved, and will be funded by loans from creditors that will need to be repaid before vesting."

Under the restructuring plan Noble unveiled on Monday evening, the new company that will hold all of its businesses, and assets will ultimately be 70 per cent owned by senior creditors, 20 per cent by the management and 10 per cent by existing shareholders.

The in-princple agreement Noble reached with 30 per cent of its creditors proposes to halve its debts of US$3.5 billion by asking them to take on equity and new debt instruments.

The outsized equity stake that the firm's management will have in the restructured entity raised some eyebrows, and led to at least one major shareholder, Goldilocks Investment Company, questioning whether the management has breached its fiduciary duty to the company and its shareholders.

Goldilocks, which owns 8.1 per cent of Noble, has sent a letter to Singapore regulators asking them to investigate the company on this and other matters.

These include whether the firm timed its announcements of strategic investors to boost its share price ahead of capital raising exercises, and whether its asset disposals have been conducted in a proper manner.

Noble said in response that many of its announcements were required by listing rules to address leaks, market rumours and media articles. "The board is not aware that any of those leaks have come from the company or its management."