Goldilocks says Noble Group's rescue plan favors management, calls for SGX to probe

An employee is reflected on the wall as she walks past a signage of Noble Resources, a Noble Group subsidiary, at their premises in Singapore. REUTERS

Singapore Exchange on Tuesday said it will ask Noble Group to respond to allegations raised by shareholder Goldilocks regarding the commodity trader's proposed debt-for-equity rescue plan.

Abu Dhabi-based Goldilocks Investment Company, which owns 8.1 percent of Noble, on Tuesday, complained to regulators that Noble's restructuring plan favors management at the expense of shareholders.

As per the deal proposed by Noble on Monday, the restructuring would be in exchange for 70 percent of the firm and leave its current shareholders with only 10 percent in the new group.

Noble said that a group of its senior creditors, who represent about 30 percent of its bonds and revolving credit facility, has agreed to the debt-for-equity swap.

The proposed restructuring includes a 3-year committed trade finance and hedging facility of up to US$700 million for Noble's commodities trading businesses.

Also Read: Noble Group shares slump 23% as restructuring deal disappoints

The issue of minority interest was also raised by investor advocacy group Securities Investors Association (Singapore) on Tuesday, saying "the proposed debt-to-equity swap will result in a steep dilution of existing shareholders' interest post-restructuring".

"Creditors and shareholders would be scratching their heads as to why the special treatment for the management. What is the basis for the special treatment of the management?" David Gerald, founder of Securities Investors Association said in a statement.

Goldilocks, in its letter sent to the Singapore Exchange (SGX), raised the same question, among others.

Singapore Exchange confirmed receipt of the letter from Abu Dhabi-based Goldilocks Investment and said it will take action.

This article was first published on January 31, 2018