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Noble Group foe Muddy Waters asks when 'last wheel' may fall

Bloomberg Published on Thu, May 25, 2017 / 4:29 PM GMT+8

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(May 25): Noble Group will almost certainly have to undergo a restructuring as the commodity trader battles for survival, according to Muddy Waters LLC founder Carson Block, who’s shorted the company before but says right now he doesn’t have bets against it.

“They’re going to have a hard time escaping restructuring,” Block said in an interview on Bloomberg Television, adding that in his view the company had less-than-zero book value. “We’re not shorted now – it’s hard to borrow, it’s expensive – and just understanding exactly when its last wheel will fall off.”

The crisis at Noble Group stretches back more than two years as the Hong Kong-based trader has grappled with losses, credit-rating downgrades and asset sales, as well as attacks from short-sellers including Muddy Waters. This week, S&P Global Ratings flagged the risk of a default within a year, spurring a rout in its bonds and shares. The company’s co-heads told staff in a memo that they were facing an “incredibly difficult environment.”