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Noble Group Plans $500 Mln Rights Issue; Chairman Elman Wishes To Step Down

Singapore-listed Commodity trading house Noble Group Ltd. (NOBGF.PK) said that its founder and chairman Richard Elman wishes to step down as executive chairman within the next 12 months. Its Board approved a fully underwritten rights issue with net proceeds of approximately US$500 million. Furthermore, it also announced an expanded cost reduction programme.

The rights issue, together with the sale of Noble Americas Energy Solutions or "NAES" announced last Monday and the previously announced sale of low return assets and working capital reduction measures will, in aggregate, generate US$2 billion in additional liquidity over the next 12 months. This liquidity will be available to further reduce net debt, and will also significantly improve the Group's financial flexibility. It also follows through on Noble's earlier commitment to raise US$1 billion in liquidity bythe end of 2016.

The rights issue announced today has strong support from both Mr. Richard Elman and China Investment Corp. or ("CIC", and will comprise: 1 Rights Share for every 1 share in Noble Group held, issued at SG$0.11 per share, representing a discount of approximately 63% to the closing price of SG$0.300 per share on the Singapore Stock Exchange on 2nd June 2016, being the last trading day of the Noble Group shares prior to the announcement of the Rights Issue, and a discount of approximately 46% to the theoretical ex-rights price of S$0.205 per share.

Richard Elman has given an irrevocable undertaking to procure subscriptions for 625.50 million Rights Shares to which he, through Noble Holdings Limited or "NHL" is entitled to under the Rights Issue, representing 9.6% of the maximum number of shares to be issued.

China Investment Corporation has given a similar undertaking in respect of the 630.56 million Rights Shares to which they are entitled, representing 9.6% of the maximum number of Rights Shares.

The remainder of the rights issue has been underwritten by The Hongkong and Shanghai Banking Corporation Limited, Morgan Stanley Asia, DBS Bank Ltd, Société Générale and ING.
Noble Group reconfirmed its earlier commitment to a comprehensive asset disposal and portfolio optimisation programme, which will generate at least US$1.5 billion, including the proceeds from the sale of NAES. This programme will comprise: Sale of ownership stakes in selected low returning assets; Continued reduction of working capital in low return businesses globally.

Noble Group today confirmed the continuation of a rigorous operating cost reduction programme witha focus on reduction in headcount following exit from low returning businesses and assets; planned headcount and SAO expense reduction in excess of 20% from current levels over the course of 2016.

The company noted that, at the request of Richard Elman, the Board will set up a sub-committee to examine options for his succession. The subcommittee will be chaired by David Eldon, who is a non-executive director and will identify a successor to assume the role of non-executive chairman. Mr Elman wishes to step down as executive chairman within the next 12 months. This matter will be discussed extensively by the Board over the coming months with the objective of ensuring a smooth and orderly transition.

In addition, Noble Group also announced the following changes to the Board. In recognition of CIC's support for the company, CIC will henceforth be entitled to a second non-executive director, in addition to the current appointee they have on the board. Noble will also seek to appoint an additional independent non-executive director with a background in international commodities and futures trading.

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