The Strategist

Hong Kong's Noble Group waves goodbye to the USA

10/10/2016 - 14:48

This morning, Hong Kong's Noble Group Limited announced sale of its US energy business unit to US Calpine Corporation. The company’s message says that Noble Americas Energy Solutions goes under the hammer for about $ 1.05 billion. The exact amount, taking into account particular conditions of the transaction, will be specified at the time of its closure, expected to happen in December.

Noble Group claims that sale of US assets actually solves a problem to attract $ 2 billion and thus reduce the company’s debt burden.

Recent years have been extremely unfortunate for the company, whose headquarters is located in Hong Kong and listed on the Singapore Exchange. Problems on the market coincided with doubts, publicly pronounced by Iceberg Research, that Noble conducted its accounts properly. The company's shares started to fall, its credit rating has been revised several times and downgraded. News of the sale elevated NAES shares in Singapore by 6.8%, but experts say that the company has not yet solved its problems on a long-term horizon. 

"The deal helps the company balance sheet in the short term, but it does not help to solve problems with liquidity" - analytical note of DBS Bank in Singapore quoted by Financial Times. In turn, Iceberg Research, which was instigator of Noble’s problems, criticized the deal, calling the sale price "disappointing for Noble". However, according to Nirgunan Tiruchelvam, an analyst at Religare Capital Markets, the transaction demonstrates that the company is going in the right direction. "The sale will lower level of investors' concerns about Noble’s liquidity and its balance. The company's strategy to get out of companies congested with assets, as well as abandonment of attempts to buy over-priced assets are positive because they help the company to focus on its core operations." – quoted by Reuters.

Noble Group is one of the largest trading companies in the world, a global supplier of agricultural products, energy, metals and industrial equipment. Headquarters of Noble Group is located in Hong Kong (Wan Chai District), the company has more than 150 offices in 40 countries (the main regional offices are located in Singapore, Switzerland, the UK, the US and Brazil).


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