Francis Tay feels cheated.
The former Singapore civil servant says he’s lost almost S$50,000 ($36,600) in the implosion of Noble Group Ltd, the commodity trading giant. He also says shareholders like him have been let down by regulators whose job it is to protect them from the sort of crisis that’s brought the company to the brink.
Yet, the 71-year-old says he still plans to vote in favor of a debt-for-equity restructuring at a shareholder meeting in Singapore on Monday that will hand control to senior creditors, diluting existing stockholders. He sees no other option. Chairman Paul Brough paints the deal as do-or-die, and it already has the backing of the biggest investors, including founder Richard Elman.
“I was cheated of my hard-earned savings,” said Tay, who still owns a small amount of shares. “How can a giant company collapse?” he said in an interview earlier this month in the run-up to the shareholder vote, adding: “What message does that send to the world about Singapore’s reputation?”
Tay and other retail investors have been among the hardest hit, although institutional investors as well as buyers of the company’s bonds when they were issued have also seen steep losses. Noble Group has shredded billions in value since 2015 as the once $12-billion company was reduced to a rump by untenable debt, losses and allegations it deceived investors with accounting tricks. The Singapore-listed trader, which has always defended the integrity of its accounts, didn’t respond to a request for comment.
Orderly and Transparent
As Noble’s troubles mounted, the role of Singapore’s regulators has come under scrutiny. In addition to running the exchange, Singapore Exchange Ltd has front-line oversight and responsibility for maintaining fair, orderly and transparent markets as well as following up with companies to investigate allegations of irregularities. It’s backed by the Monetary Authority of Singapore, the de facto central bank of a city state that’s also a global financial center with a hard-earned reputation for probity.
In the case of Noble Group, allegations have come thick and fast, led by Iceberg Research, which says profits were inflated. The group -- whose claims are rejected by Noble -- is led by Arnaud Vagner, a former credit analyst at Noble in Hong Kong, where the trader was based before it moved to London, who recently dropped his self-imposed cloak of anonymity.
‘Policeman Without a Gun’
“The SGX is a policeman without a gun,” said Tay. “Layman investors like us only have access to on-the-surface information, such as company releases or news reports.”
The SGX defended itself by setting out a summary of the actions it’s taken over the past three years as Noble suffered blow after blow. The tally includes frequent contact with the company, queries for more detail on its results and its demand that Noble appoint an independent financial adviser to assess the debt-for-equity plan that Tay and others are about to vote on.
“Questions ought to be asked about whether the SGX board has adequately prioritized investor protection,” said Mak Yuen Teen, an associate professor of accounting who specializes in corporate governance at the National University of Singapore Business School. There are also questions on whether the board has given sufficient resources to SGX RegCo, he says, referring to the arm of the SGX that discharges its regulatory functions.
Audits and Review
After Iceberg’s first report, “we required the issuer to appoint a Singapore auditor to do an independent review, and took a series of actions to ensure the issuer’s auditor addressed the issues of concern in every single year-end audit since FY2015,” an SGX spokesperson said. “Notwithstanding that both the audits and review were clean, we continue to do our part to investigate matters that are within our remit. We are committed to holding issuers and professionals responsible for their actions and opinions. If there is any evidence of wrongdoing, we will refer it to the appropriate authorities.”
The SGX spokesperson added: “In terms of whether our resources are adequate, we are accountable to both the SGX RegCo board and the MAS.”
It’s the second time that a major trading company based in the city state has run into trouble. Olam International Ltd, one of the world’s largest food commodities traders, came under attack from Muddy Waters LLC in 2012. The short-seller raised doubts about its finances, compared it to failed energy trader Enron Corp. and it said ran a high-risk of failure. The trader dismissed the claims but after a rout in its shares, Temasek Holdings Pte., the state-owned Singaporean investment fund, eventually took a controlling stake in May 2014.
Full story at https://www.bloomberg.com/news/articles/2018-08-26/-i-was-cheated-tales-from-the-collapse-of-a-commodity-giant
Noble Group shareholders approve $3.5 billion debt restructuring
Noble shareholders reluctantly backed a debt-for-equity swap that will leave them with ownership of just 20 percent of the business, while handing majority control to a group of creditors comprised mainly of hedge funds.
Small shareholders at the meeting said they were angry with Noble's management as the plan diluted their investment value.
The crisis for the company started in February 2015 after Arnaud Vagner, a former employee, published reports anonymously under the name of Iceberg Research that accused Noble of inflating its assets.
Nicky Loh | Bloomberg | Getty Images
Noble Group Ltd won approval on Monday from a majority of shareholders for a $3.5 billion debt restructuring plan that should ensure the survival of what was once Asia's biggest commodity trader.
Faced with the prospect of the company's insolvency, shareholders reluctantly backed a debt-for-equity swap that will leave them with ownership of just 20 percent of the business, while handing majority control to a group of creditors comprised mainly of hedge funds.
"Today, the decision to avoid liquidation rests in your hands," Noble Chairman Paul Brough told shareholders at a packed meeting before the voting began.
Small shareholders at the meeting told Reuters they were angry with Noble's management as the plan diluted their investment value, but added they saw no choice but to support the plan in order to save at least some of their investment.
Roger Ong, 49, a driver who has invested in Noble shares said he had no choice but to vote in favor of the plan.
"We want to keep the company afloat rather than liquidate it," he said.
Noble, founded in 1986 by Richard Elman, who took advantage of a commodities bull run to build it into one of the world's biggest traders, has had its market value all but wiped out from $6 billion in February 2015.
The crisis for the company started that month after Arnaud Vagner, a former employee, published reports anonymously under the name of Iceberg Research that accused Noble of inflating its assets. The upheaval triggered a share price collapse, credit downgrades, writedowns and asset sales.
Singapore-listed Noble has always stood by its accounts.
Under the debt-for-equity deal, the company's debt will be halved and it will get access to trade finance and hedging facilities, vital in a sector where profit margins are in the low single digits.
In return, Noble will hand over 70 percent of its restructured business to creditors, while existing shareholders' equity will be reduced to 20 percent and its management will get 10 percent.
Full story at https://www.cnbc.com/2018/08/27/noble-group-shareholders-approve-3point5-billion-debt-restructuring.html
Now we know with certainty it is a myth that Singapore has good governance and strict regulations in place.
The authorities basically did nothing as Noble submitted questionable accounts which were previously highlighted by Iceberg Research.
Key Noble executives should have been called in back then for rigorous questioning after whistle -blowers exposed their accounting practices as crimes could have been committed.
Yet still no action taken by the SG government.
What is more SHOCKING is that they actually allowed Noble Group to proceed with the rights issue and as a consequence plunder more money from shareholders.
The level of incompetence on PAP's part is highly deplorable.
Zero sympathy for the greedy fucktard who blindly went with the flow. Hope he ends up committing suicide. Earth is badly diseased with stupid people.
Singapore-listed Noble Group faces a make-or-break shareholders' meeting on Monday (Aug 27) as investors vote on a US$3.5 billion debt ...
https://www.channelnewsasia.com/news/business/fighting-to-survive--noble-group-s-fate-hangs-on-investors-restructuring-vote-10648196
Singapore-listed Noble Group faces a make-or-break shareholders' meeting on Monday (Aug 27) as investors vote on a US$3.5 billion debt restructuring plan that its creditors and board say is vital to prevent insolvency.
..... Desperate to slash debt, Noble sold a string of assets but this was not enough to run a trading business where profit margins are tiny. It posted a record US$4.9 billion loss for 2018 and then defaulted on its debt in March.