Noble Group CEO quits as energy solutions business put on sale

Singapore: Noble Group Ltd said Yusuf Alireza resigned as chief executive officer and announced a plan to sell part of its gas and power unit less than a month after Alireza himself described Noble Americas Energy Solutions as one of the core assets it wanted to keep.

Alireza, 45, decided “the time was right” to resign after shifting the commodity trader toward an asset-light model, selling its Noble Agri business and arranging a refinancing, Noble Group said in a statement. In a second announcement, the company said William Randall, Noble Group president, and Jeff Frase, president of Noble Americas, will replace Alireza, and that the sale process for the gas and power distribution unit will start soon.

The former Goldman Sachs Group Inc executive who was appointed CEO in 2012 has been pivotal to efforts to keep Noble Group afloat as shares collapsed last year amid a rout in commodities and attacks on its accounting. While Alireza has been selling assets, including the agricultural unit to China’s Cofco Corp to raise funds and cut debt, he’d also indicated in May that Noble Americas Energy Solutions was part of the business he wanted to retain. The planned sale is in addition to fund-raising plans already announced, Noble Group said Monday.

‘It’s Discouraging’

“It’s discouraging in terms of the confidence to the company,” Margaret Yang, a strategist at CMC Markets in Singapore, said by phone, referring to news of Alireza’s departure, which came an hour before the start of trade in Singapore. There’d been speculation about Alireza’s status in recent weeks as shares slid even as commodity prices rose, according to Yang.

An external spokeswoman declined to comment further on Alireza’s departure. Alireza said he had no comment beyond the company’s statement when contacted by mobile phone.

Noble Group dropped as much as 3.3 per cent to 29.5 Singapore cents, matching the intraday low seen on Friday, and traded at 30 cents at 11:51am. The shares plunged 65 per cent last year and have lost a further 25 per cent in 2016. Still, the company’s January 2020 notes rose 0.5 cent to 75.35 cents on the dollar on Monday, the highest level since November, according to Bloomberg-compiled prices.

Noble Group is seeking to sell assets to bolster its balance sheet after the company had its credit-rating cut to junk. When reporting first-quarter figures this month, it flagged the potential for the sale of non-core assets as well as other capital-raising initiatives. The moves would generate more than $1 billion by year-end, Alireza said on a May 12 conference call, while making clear he considered Noble Americas Energy Solutions as a core asset.

San Diego

The San Diego-based business offers supply and risk-management services to commercial and industrial customers, buying energy wholesale for sale as retail products, according to the company’s annual report. Noble Group bought it from a joint venture between Royal Bank of Scotland Group Plc and Sempra Energy in 2010 for an enterprise value of $582 million and it had a net book value of $322 million as of August 2015. The sale is expected to “substantially enhance the balance sheet,” Noble Group said on Monday.

The business is part of Noble Group’s Gas and Power unit that had an operating income from supply chains of $400 million in 2015, or about a third of the company’s total of about $1.18 billion. The Energy unit, which includes oil trading, made $895 million.

When asked on the May 12 conference call whether planned non-core asset sales will include Noble Americas Energy Solutions and the oil-trading business, or whether those were off limits, Alireza said: “I wouldn’t define those as non-core, definitely not. Okay.” Later, Alireza listed Noble Americas Energy Solutions as a “core business line.”

The fate of the unit now rests largely with Alireza’s successors, who will work as co-CEOs, and with chairman and founder, Richard Elman. Randall, 41, has been at Noble Group since 1997. He worked in the company’s coal and hard-commodities operations and has a seat on the board, according to the statement. Frase, 48, is currently based in Stamford Connecticut, and joined the company after stints at JPMorgan Chase & Co. as well as Goldman Sachs.

“Mr. Alireza has helped guide Noble through a very challenging period, moving the company to an asset-light, merchant-focused model; he played a pivotal role in the successful sale of Noble Agri to a group of investors led by Cofco, and has also been instrumental in securing the recently announced refinancing,” the company said. “With this transformation process now largely complete, Mr. Alireza considered that the time was right for him to move on.”

About the Author

Dave R. Brown
Dave moved to Gulf Feed from Burnbrae Asset Management, where he headed up the new business team of the financial services division. Aside from his expertise in delivering value for a large network of clients, Dave has a wealth of experience in the areas of the financial markets and implementing change management. This was gained from his time managing GECR, an equity research company, where he returned it to profitability from a period of heavy losses. Dave has a background in mathematics and his previous experience, prior to Burnbrae Asset Management, was as an investment analyst for MSCI.