Noble shares hammered after CEO’s sudden resignation

Cecilia Jamasmie | May 30, 2016 | 4:55 am Energy Asia Europe Coal

Noble shares hammered after CEO sudden resignation

Yusuf Alireza, a former Goldman Sachs Asia co-head who joined Noble four years ago, steered it into selling assets and cutting business lines as part of a radical transformation to become a company which did not own bulky assets. (Image: Screenshot from FT.com interview via YouTube)

Noble Group’s (SGX:N21) stock shed more than 8% Monday in Singapore after its chief executive officer Yusuf Alireza quit unexpectedly and the firm announced plans to sell Noble Americas Energy Solutions (NAES), one of its crown jewels.

The surprising move comes just weeks after Alireza, 45, secured crucial financing for Asia’s biggest commodity trader by volume, which has been hit quite hard in the last year by slumping prices, a large debt pile and questions over its accounting practices.

Noble also announced it would sell a business that less than a month ago Alireza himself described as a core asset the trading company wanted to keep.

Noble said it has named its president William Randall, and Jeff Frase, global head of oil liquids, as co-CEOs, effective immediately.

The embattled group, founded by British-born former scrap dealer Richard Elman 30 years ago, also said it would begin a sale process for NAES, worth over $1.25 billion as per Aug. last year.

According to Noble, the NAES transaction is “expected to generate both significant cash proceeds and profits to substantially enhance the balance sheet”.

The Hong Kong-based company booked a $1.2bn write-down on long-term coal contracts in its 2015 annual results, as assessments of future energy prices dropped. That led to a $1.7bn net loss, the firm’s first annual loss in more than two decades.

Noble shares have fallen almost 65% over the past year after Iceberg Research alleged the group was inflating its assets by billions of dollars. The beleaguered commodity trader rejected the claims and board-appointed consultants PricewaterhouseCoopers found it had complied with international accounting rules.

Other companies, including GMT Research, have since come forward to criticize the trader’s bookkeeping practices.

Noble Group’s credit rating has been cut by Moody’s Investors Service Inc., S&P Global Ratings and most recently Fitch Ratings on May 17. It had net debt of $1.9 billion maturing over the next 12 months, the firm said earlier this month.