Oct 11, 2016

    Noble sells US energy unit for $1.44b

    SINGAPORE-LISTED commodities trader Noble Group agreed to sell its North American energy distribution unit to United States firm Calpine for US$1.05 billion (S$1.44 billion), moving a step closer to completing a restructuring to raise US$2 billion to help cut debt.

    The sale of Noble Americas Energy Solutions (NAES) includes repayment of working capital of about US$248 million, Noble said.

    Noble's shares rose nearly 7 per cent in early trading yesterday.

    The move comes as the Hong Kong-based trader aims to rebuild investor confidence after a brutal commodities downturn coincided with a questioning of its accounts early last year by Iceberg Research, sparking a collapse in its share price.

    "The sale will reduce investors' concerns about Noble's liquidity and balance sheet," said Nirgunan Tiruchelvam, an analyst at Religare Capital Markets.

    He said the company's strategy of getting out of asset-heavy businesses rather than chase "overpriced assets" was positive as it would help it focus on core operations.

    Noble expects the NAES transaction to close in December this year.

    "The sale of NAES substantially completes the US$2 billion capital raising initiative that we announced in June," Noble's co-chief executive officers Jeff Frase and Will Randall said.

    "With this divestiture, Noble will continue to reduce debt while also funding growth opportunities in our high-return businesses."

    Noble's former CEO Yusuf Alireza, a former Goldman Sachs Asia co-head, quit unexpectedly in late May after helping Noble secure US$3 billion in credit facilities.

    The firm's founder and chairman Richard Elman also said in June he would step down within 12 months.

    He grew Noble into one of the world's biggest traders of commodities in a bull run since setting up the group in 1986.