Analysts are cautious.
Noble has two significant announcements made today. First, It announced that Yusof Alireza has resigned as CEO and will appoint William Randall and Jeff Frase as co-CEOs.
Secondly, Noble announced that it will be starting the sale process for Noble Americas Energy Solutions (NAES), one of the top energy retailers in the US. NAES was the former Sempra Energy Solutions which Noble acquired from RBS in 2010 for US$318m (Noble also assumed c.US$265m worth of debt).
Below are analysts' take on the possible implications of the two major announcements:
Margaret Yang Yan, market analyst, CMC Markets Singapore
This morning, Noble Group has announced that its CEO Yusuf Alireza, in the position for four years, has resigned due to family reasons. The company will also sell the US energy marketing firm Noble Americas Energy solutions to raise cash to strengthen its balance sheet. The share price has plunged almost 40% from March, and a lot of bad news surrounding this company has been priced into the share price.
In the short term, market sentiment is likely to be affected. If a change of management could bring in structural reform going forward, however, then it is probably not bad news in the long term
Joe Morrison, Moody's Vice President and Senior Credit Officer
From a supportive perspective, we note continuity in operational management with the appointment of new Co-CEOs Will Randall and Jeff Frase, both of whom are experienced executives in Noble's key businesses.
In addition, the successful refinancing in May of the company's bankfacilities has alleviated near-term pressure on its liquidity profile for the next 6 to 9 months.
Yusof Alireza’s resignation was a surprise. However, we do not expect any major changes in strategy given both William Randall and Jeff Frase have been with Noble for several years and Richard Elman remains as Chairman and Executive Director.
While the sale of NAES will strengthen Noble’s balance sheet, we believe investors will remain cautious on the stock until Noble is able to achieve positive operating/free cashflows on a sustained basis.
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