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Singapore investigation casts doubt over Noble debt restructure

SINGAPORE -- Noble Group has insisted it will press ahead with a vital $3.5 billion debt restructuring despite Singaporean authorities this week launching an investigation into "false and misleading statements" by the company, which was once Asia's biggest commodities trader.

Noble said Wednesday that "it will continue to work towards implementing its proposed restructuring within the previously disclosed timelines."

The restructuring plan -- a $3.5 billion debt-for-equity swap that will hand over majority control to creditors by the end of this year -- was approved by shareholders in late August. Noble stressed that this plan was "in the best interests of all of the company's stakeholders."

Singapore authorities said Tuesday they were investigating the locally listed company for suspected false and misleading statements and breaches of disclosure requirements under the city-state's laws. Authorities are also looking into potential noncompliance with accounting standards by Noble's wholly owned subsidiary, Noble Resources International.

Hong Kong-based Noble was founded in 1986. Dealing in coal, gas, metals, and other commodities, the company became an influential trader in Asia, with its net profit peaking at about $600 million in 2010.

But the company has fallen on hard times since 2015. Not only was its performance hit by the global commodities slump, its share price fell dramatically after research company Iceberg Research accused Noble of accounting irregularities in early 2015.

Last year, the company made a net loss of $4.9 billion. Its net assets fell to negative $1 billion at the end of June, while its market capitalization shrank to 107 million Singapore dollars ($77 million). Trading in its shares was suspended after Nov. 16 in accordance with the restructuring plan. Noble shares closed at 8 Singapore cents on that day, a far cry from its peak of around SG$17 in 2011.

Singapore Police Force, the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority said in a joint reply to Nikkei that they had been working since 2015 to "carefully review the allegations raised by various parties against Noble Group, and following up on information and leads provided."

The key concern now is whether this probe would hamper Noble's restructuring process. Brayan Lai, an analyst at Hong Kong-based credit researcher Bondcritic expressed "some element of doubt" over the process as one of the procedural aspects of the restructuring involves relisting the company on the Singapore Exchange.

According to Singapore Exchange, its regulatory arm will be reviewing whether the investigations impact the financial statements disclosed in the circular related to the proposed restructuring. "Trading can only start after restructuring has been completed and this is in turn dependent on our review," a spokesperson said.

A Bloomberg report on Wednesday said that if the restructuring wasn't completed by the deadline, the schemes of arrangement -- by which Noble is implementing its debt restructuring -- would not take effect. A failure of the restructuring would be a blow for its creditors.

In Wednesday's statement, Noble said that the company and its subsidiary will cooperate fully with the authorities.

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