I remember well around 10 years ago talking about these demands to Khalid Hashim, md of Bangkok-listed Precious Shipping, a man who justly prides himself on his company’s corporate transparency. He summed the situation up very simply: “If you want the public’s money, you have to be willing to take off your clothes in public.”
Fast forward a decade, and on Monday afternoon, Seatrade Maritime News witnessed Noble Group, and its management, getting metaphorically naked. In front of 400 plus shareholders, financiers and the media, the company tried to prove they had nothing to hide in the way it values its businesses and contracts. Some obviously believed they did not remove all their clothing.
Singapore-listed Noble Group’s troubles this year are well documented, starting back in February when anonymous blogger Iceberg Research launched the first in a number of detailed salvos against the Hong Kong-headquartered commodities and shipping firm. Iceberg was latterly joined by US-short seller Muddy Waters, adding to Noble’s public woes.
In Monday afternoon’s three hours of presentations in the ironically (given the involvement of Iceberg) freezing cold air-conditioned environment of the Ritz-Carlton Singapore ballroom, pretty much every member of Noble’s top management got up and presented their case to the assembled crowd, and it was interesting sight to behold.
The presentations featured a frankly daunting 140 powerpoint slides, all later posted on the Singapore Exchange, and not to mention the highly comprehensive first half year 2015 results slides left in printed form on all attendees chairs.
Suffice to say Noble’s investor relations day was one of the longest, if not the longest, single company briefing I have attended in my near 20 years as a shipping journalist.
The event veered from the combative towards the individual Noble believes is behind Iceberg Research - “We look forward to the day when he will need to defend himself in a court of law”, to motherhood statements – “Your Noble is our Noble” and lengthy near marketing pitches of some of its business units. To simply – this is what we have done – please read it.
Of core interest to most was Noble addressing the key allegations against it relating to its cashflow and its mark-to-market (MTM) valuations. On the issue of cashflow ceo Yusuf Alizera, noted that its critics failed to take into the account the cash it had brought into the company via two major transactions. “You can’t talk about the cash we are investing working capital without talking about the $4bn plus that was brought in by just two transactions our Yancoal transaction and Noble-Agri. So what we show here is a clear cash waterfall,” he stated.
On the issue of its MTM valuations Noble spent considerable time stressing the validity of an independent review by PricewaterhouseCoopers (PwC). “It is disingenuous and shows people’s true colours that anyone would try to discredit PwC’s work before actually reading it. And that anybody would really believe that PwC would come in, in an environment of so much volatility and negative press, and basically rubber stamp.”
However, criticism of the PwC report lies with the scope of work it was asked to undertake, that it looked only at the processes Noble uses to derive its MTM valuations, not the actual valuations themselves, which Paul Brough, the independent director who headed the Mark-to-Market committee said “would have been a very time consuming process”.
Beyond addressing key criticisms against the company there were lengthy presentations on the operations of its various business units and their plans.
“Our shareholders, trust us, respect us, understand these short sellers are trying to manipulate our stock, and shareholders really want to hear how we are going to deliver results,” Alizera said.
The fact is it did go on rather too long, but I guess that was also the point. However, scrawled down in my notes I have comments such as “1hr 47 mins, on slide 58, mini chicken pies in foyer good”, betraying that it was a bit all too much for all but the most committed attendees. So I shall resist the temptation of a marathon blow-by-blow account, but for those who do want to know all – all of those 140 powerpoint slides are available here.
But back to the point of the afternoon - would Noble having been willing to have done this to the level of transparency they did before the first Iceberg report in late February? It would seem unlikely. It was clear that the appointment of certain independent directors in particular roles and the committee that oversaw the mark-to-market review by PwC were reactions to the events that have happened since February. Indeed Noble was clear in pointing these facts out.
It would also be hard to believe that this is what Noble founder, chairman and 74-year old self-made billionaire Richard Elman, would want to spend his afternoons doing if he did not need to. Or even his ceo Alizera, who palms pressed together, appeared to spend some time in short silent prayer on returning to the lectern before giving his closing remarks, prior to the Q&A session. And lets not forget the Stamford, Connecticut based senior executives who dialed in to give presentations in the middle of their night-time.
However, the company’s top executives did spend considerable time doing this because as an under fire publicly-listed company they are well aware they need to demonstrate as far as possible to the world at large they have nothing to hide.
But what did it all achieve? Well the first shareholder to ask a question after the three-hour briefing ended stated Noble should answer its critics rather than evading them, and analysts have been critical about the lack of new information. On Tuesday Noble’s share price fell four cents to SGD0.415, although it has recovered a bit since as short-selling surged, something which Noble is seeking to stem. To be fair probably not the outcome the company had been looking for.
For those seeking the public’s money to raise funds for expansion or realise their investments – they might want to take note of Noble’s naked experience as a cautionary tale on what can be involved.
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