Finance

Crisis torn metal trader on the brink: Noble Group founder sees £2bn stake collapse to just £44m

The founder of crisis-torn oil and metals trader Noble Group has seen his £2billion stake in the company collapse as it fights for survival.

British tycoon Richard Elman, 77, set up the firm in Hong Kong in 1986 and turned it into one of the world’s largest commodity traders during 30 years at the helm.

But shares are down 88 per cent since February this year and 98 per cent since their peak in 2011 when Elman held a stake worth nearly £2billion.

The slump in the last 15 weeks has slashed the value of Elman’s 18 per cent holding from £368million to just £44million – a loss of £324million, or £3million a day.

British tycoon Richard Elman, 77, set up Noble Group in Hong Kong in 1986 and turned it into one of the world’s largest commodity traders during 30 years at the helm

Noble, which has been plagued by questions over its accounting and a slump in commodity prices on global markets, is now locked in talks with its banks as it battles to survive.

The crisis underlines the remarkable rise and fall of a company that at the peak of its powers was worth £11billion and was the biggest commodities trader in Asia, dealing in everything from oil and coal to metals and soybeans.

Elman, a father of four, left school in Brighton at 15 and took up work as a scrap metal trader in London before heading to Asia in the 1960s when he was in his 20s.

He spent a decade with commodities trading firm Phibro, where he was regional director of the Asian operations, and eventually set up Noble in 1986 in Hong Kong.

Noble listed its shares on the stock exchange in Singapore in 1997, helping Elman amass a fortune as commodity prices boomed in the 2000s.

Elman was just one of a handful of tycoons to reap the rewards of rising commodity prices, with his success compared to that of Glencore chief executive Ivan Glasenberg and Vitol Group boss Ian Taylor.

By 2011, Elman’s stake in Noble was worth around £2billion.

But the company has struggled in recent years on the back of a slump in commodity prices and has run up debts of £2.5billion.

Noble last year recorded its first ever annual loss and has been rocked by accusations of accounting irregularities, although it denies any wrongdoing.

In a letter to shareholders last month, announcing that he was stepping away from the day-to-day running of the business, Elman warned that Noble would not be back in profit until 2019.

‘It will be a long, hard slog with ups and downs along the way, until we regain profitability,’ he said in the letter.

With Elman taking on the role of chairman emeritus, and handing over the reins to a new executive chairman, Paul Brough, the hunt is now on for a white knight investor to inject cash into the business.

Noble was last night locked in talks with its banks in a desperate bid to secure more time to find the new investment and stave off collapse.

It wants lenders, who include HSBC, Societe Generale, ABN Amro, Citigroup and ING to extend a £1.5billion credit line, which provides vital funds for the company but is due to expire this month.

But if a deal cannot be reached it is feared that Noble could be forced to file for bankruptcy.

Sources close to Noble said it was ‘a positive development’ that the banks have appointed advisers to look at their options.

But the company declined to comment yesterday.

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