Category Archives: Corporate Governance

Someone’s Gotta Pay the Price Ex-Noble Group’s CEO Alireza Sues Founder Elman for $58 Million

Ex-Noble Group’s CEO Alireza Sues Founder Elman for $58 Million

“The former chief executive officer of Noble Group Ltd. has filed a lawsuit against founder Richard Elman claiming that he’s owed stock in the embattled commodity trader”.

“Elman gave Alireza six months’ notice of termination, citing irreconcilable differences between the two on how the company should be run in future, the writ says”.

“According to the writ, Alireza had a deal to receive about 63.9 million fully-paid shares in Noble Group for starting work at the company, and an additional 52.3 million shares when his employment was terminated. He claims those shares haven’t been transferred”.

-Bloomberg

For the 1st time we learn that the departure of  the CEO of Asia’s Largest Commodity Trader wasn’t an unexpected resignation but a termination.

We doubt Alireza is “in-the-money”, his performance was rather mediocre but in the absence of a decent board and with Noble (來寶集團) pushing back against the exchange guidelines  for disclosing information on its executives’ remuneration in Singapore anything is possible.

Also adding to the oddness, the defendant isn’t Noble Group LTD but a shelf-company  –Fleet Overseas (New Zealand) Ltd, an intermediary that banks dealing with the Noble camp have just been revealed the existence of.

At the present it remains impossible to determine the exact nature of Fleet Overseas (New Zealand) Ltd and its relationship with Noble Group (來寶集團) nor we can’t know the exact stock compensation scheme to remunerate its executives.

Noble (來寶集團) has some bonus/compensation/stock options liabilities not limited to its MDs.

Traders have also to protect their biscuit.

There are many rumors circulating in the market about a Noble Group (來寶集團) trader  got a special arrangement with Noble after he threatened to go with another company in Houston.

We muse that Fleet Overseas might had effectively acted as a SPV (special purpose vehicle) to offshore potential future liabilities “off-the-balance sheet”. 

Giving the future viability Noble Group (來寶集團), these liabilities will likely expire worthless. 

More importantly, 4 Banks are long on this thing left with a $1.5B exposure, a Winner with no financial substance or unencumbered assets, zero management oversight, a porous risk management and no physical trading traceability.

 

-the Noble Files 高贵组文件 研究

 

 

 

This time Noble (來寶集團) will work for itself, not for the banks…

Last year we predicate that refinancing Noble (來寶集團) would be a lose-lose deal in which everyone would end up looking bad.

 

“At some points the Banks must get out, must unload the RCF risk with the red pill and it means that Noble will work for the Banks”.

“This is the equity offering of a company with very questionable or no prospects, transferring risks to retail investors”.

In short, this is a lose-lose deal in which everyone ends up looking bad”.

Refinancing Noble: a Lose-Lose Deal

March 16, 2016 

–  the Noble Files 高贵组文件 研究

The only thing we got wrong in 2016 is that some Banks would still accept to refinance the liabilities of Noble (來寶集團) on the back of an equity raising.

The investors have eaten the red poison pill and we simply overestimated their level of sophistication.

Can anybody look back and say it was good to let Noble raise more than 1.2B in equity offering and bonds ?

  • The 750M bond raised is traded at 40c on the dollar.
  • Equity investors who also subscribed to the 500M share rights issue at 0.20/share are now at 0.03…


Success can’t be imposed on this circus.

As of Q1-2017, Noble Group (來寶集團) had $3,4B of marked-to-market fair-value gains on derivatives and commodity contracts.

What does the $3.4B MtM figure represents ?-this MtM is not contracts that can be liquidated to cash.

Given that the Operating loss is created by a mismatch between the level of profits booked on these derivatives and commodity contracts and their underlying expected cash-flows, the real nature of this MtM can be viewed as an expensive liability that Noble (來寶集團) has to roll-out.

Noble (來寶集團) has even pushed back against guidelines in Singapore for disclosing information on its executives’ remuneration.

Perhaps Noble (來寶集團) needs to raise another 2B to pay coming debt retirement (reassure the lenders that they refinance the fair to arrive net equity on a future solvency basis) – as the book doesn’t generate positive cash-flow since 44 months.

It is no longer a working capital shortfall that we observe but the liquidation of a trader  (virtually silent in the physical market)…

Lenders will choose to roll up credit. IF not, they precipitate a restucturing which is told to be not in the interest of the 2020 and 2018 bond holders (FT).

 noble group fate.png

It should be pretty clear.

This time Noble (來寶集團) will work for itself, not for the banks.

On the road show, Noble has asked the permission to decrease its net equity.

It wants to set its own “term sheet” and its covenants to be relaxed, exactly the opposite wanted by the other side.

4 Banks are long with a $1.5B exposure left with this intermediate situation :

 

 

the Noble Files 高贵组文件 研究