Noble Group Founder Distances Himself From Debt Deal in New Blow

(Bloomberg) -- Richard Elman, the 77-year-old founder and largest shareholder of Noble Group Ltd., quit due to "differences of opinion" with the firm’s board and creditors over its future, in a fresh blow to the trading house’s attempts to push through a massive debt restructuring.

The statement Friday came less than two hours after a regulatory filing showed that Elman this week trimmed his stake in Noble from 18.07 percent to 17.94 percent. The sale is small but symbolic: Elman, who started Noble with $100,000 of his savings in 1986, sold shares only once previously in the company’s history, he testified in a court case last year.

Noble Group Founder Distances Himself From Debt Deal in New Blow

The disclosure of Elman’s disagreement with the board and the creditors "on the way forwards" caps a dire week for the company, in which it defaulted on a bond repayment, and was sued separately by one of its largest shareholders and by one of its coal trading counterparties.

Elman’s resignation was announced by Noble two days ago. At the time, however, the company said there were no "unresolved differences of opinion on material matters" between Elman and the board. A spokeswoman for Noble declined to comment on the discrepancy between the two statements.

The fate of the Hong Kong-based company -- once Asia’s largest commodity trader -- is hanging in the balance as it attempts to push through a major debt restructuring that would hand control to its creditors. The company has said it will file for administration if shareholders don’t approve the restructuring plan.

That means Elman’s vote will be key to the company’s ability to avoid a court-driven insolvency process -- something Chairman Paul Brough has said would be "very damaging" for its business.

Elman, who stepped back from day-to-day management of Noble a year ago when the company appointed restructuring specialist Brough as chairman, has been closely involved in discussions over the debt plan as a director of the firm. However, the deal announced by Noble last week had not made clear whether Elman would continue to have a role in the company’s management or on its board after the restructuring.

Elman’s share sale follows reductions by Orbis Allan Gray Ltd. and Prudential Plc, both of which have long been among the company’s top five shareholders, according to regulatory filings. Noble’s shares on Friday dropped to the lowest level in 19 years, giving the company a market capitalization of just $94 million, compared with more than $10 billion at its peak.

In Friday’s statement, Noble described Elman’s disagreement with the board as "amicable."

"The board respectfully thanks Mr. Elman, the founder of the company and the key driver of its historical successes, for his unique contributions to the company over his more than 30 years of loyal service,” it said.

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