Iceberg hits out at Noble Group’s “intensively engineered” debt levels

Its gross debt is 41% higher than reported.

Anonymous Iceberg Research has released its third report against mainboard-listed commodity trader Noble Group, claiming that the group’s governance is filled with a series of red flags and that its debt levels are “intensively engineered”.

Iceberg claimed that Noble substantially understates both its gross and net debt, and that its gross debt is 41% higher than reported (+$1.6b), while net debt is 64% higher than reported (+$2b).

“Noble intensively engineers its level of debt at reporting date with what we believe is the help of heavy repos disguised into regular sale and purchase. Using inventories to repay banks and bond holders would immediately trigger Noble’s bankruptcy. We estimate that after adjustments, the major financial covenants are breached,” stated the report.

Iceberg also claimed that Noble’s governance is filled with a series of red flags, such as independent directors being on the board for 19 years, the withdrawal of key shareholders and staff from the company, the removal of “negative assurances” from its website, and the high number of reservations expressed by the auditor in the annual report.

“Noble Group is a repeat of Enron. Both companies use similar actions in an attempt to deceive investors. Noble, like Enron, misrepresents the three components of its financials: income statement, balance sheet and cash flow statements,” the report noted.