There is still an unanswered question : Why did Noble write down some US$400m+ in value of its assets only AFTER Iceberg made their disclosures about over inflation of its asset values?
Aquarius, valid question. Many people reckon it's due to Iceberg publicity/pressure.
The new twist is that Singapore's port authority has denied allegations of misconduct made by Iceberg Research against a subsidiary of commodities trader Noble Group.
Singapore's Maritime and Port Authority (MPA), in an emailed statement to Reuters, said it had in 2013 received information relating to the conduct of Noble Resources International Pte Ltd, but did not find any malpractices by the company".
According to DBS, the law of diminishing returns have clearly set in on Iceberg Research’s third research report against Noble Group.
Recall the second research was released on 15 Feb and the reaction was a 13% drop in Noble Group’s shares in the subsequent 2 days. The second research report was on 25 Feb and the reaction was a lesser 11% drop in the subsequent 2 days.
The reaction to the third and final research report was a 4.5% gain on 23 March.
This indicates that the sell-down in relation to Iceberg’s claims has likely run its course.
Aquarius, what do you think of the funds buying the shares from a skeptical market? Yet another fund, Orbis Investment, has accumulated shares of Noble, just became subst. shareholder.
We categorically reject their allegations as inaccurate, unreliable and misleading.
EXECUTIVE SUMMARY
We categorically reject the assertion that Noble exists to borrow and burn cash
In fact, our balance sheet has never been stronger. Furthermore, the time period of 20 years
referenced by Muddy Waters has seen Noble grow from a company with $377m of revenue to revenues of more than $85Bn.
Muddy Waters have also omitted the impact that the Agri business has had on Group results over the last few years and most importantly, the Free Cash Flow metric quoted in their
report incorrectly omits the approx. $3.4Bn of cash proceeds received from the sale of our 51% interest in Noble Agri. This is an important omission given that over the past several
years, the Group has made significant investments in its Agricultural Platform, which we substantially recouped through the sale at a premium to book value.
We categorically reject the notion that Noble’s debt levels are unsustainable
Our balance sheet has never been stronger or more liquid. As at the end of December 2014, our debt to capitalizations was at a historic low of 38%. Also we carried $5.2bn of liquidity
headroom. In terms of our debt profile, half of the outstanding debt has a maturity of over 2 years.
We categorically reject the assertion that Intra Quarter Debt levels increase by +$3Bn
We acknowledge that our debt does fluctuate intra-quarter, however this is more a reflection of market practice, and nowhere near the +$3bn claimed.
We categorically reject the unfounded allegations that Noble misled investors or manipulated the accounting in the acquisition and disposal of PT Alhasanie (“PT ALH”)
The acquisition and disposal proceeds of PT ALH, and the accounting of them, are fully explainable through arms length commercial arrangements and third party independent
valuations.
Through arms length commercial arrangements, going back to 2003, Noble secured long term off take arrangements by assisting in the development of various mines in the Sanga Sanga River area on the Mahakam River in East Kalimantan, Indonesia. As regulatory and market changes developed over time, Noble acted accordingly to protect this investment and the interests of both shareholders and clients.
It is worth noting that since Noble’s involvement in the asset, Noble has realized over $40m in direct cash gross profits on sales from this mine, underpinning the asset value.
