Noble's NAGP sale profits shaved to $139.2m

No thanks to changes in working capital, escrow.

Changes in working capital and amounts allocated to escrow led Noble Group to get less from the sale of its gas and power unit Noble Americas Gas & Power Corp (NAGP), it said in a reply to queries from the Singapore Exchange (SGX).

Noble said it received $139.2m (US$102m) from the sale of NAGP to Mercuria Energy America Inc (Mercuria). It previously told shareholders that it should have received $356.2m (US$261m).

It explained that Mercuria was required to pay a net working capital minus $88.7m (US$65m) and indebtedness, but it could also allocate money into escrow.

NAGP's working capital had fallen between March and June 2017 and September 2017 as it settled customer invoices, which lowered trade accounts receivable and converted working capital into cash.

Trade accounts receivables were approximately $128m (US$94m) at 31 March 2017, $117.3m (US$86m) at 30 June 2017, and $96.9m (US$71m) at 30 September 2017.

Mercuria also placed $113.3m (US$83m) in escrow. This was not shown to shareholders in August. That escrow amount included $55m (US$40m) that has been previously disclosed to shareholders and an additional $58.7m (US$43m) that Mercuria was required to deposit.

The $139.2m (US$102m) that Noble received is comprised of the closing date net working capital less $88.7m (US$65m) less escrow.

"The conversion of working capital into cash refers to the fact that trade accounts receivable fell as customer invoices were settled for cash. Therefore working capital decreased and as a result the amount paid by the Buyer also decreased," Noble said.