Muddy Waters asserted in a report issued April 8 that, according to Bloomberg, Noble has been free cash flow positive only four out of 20 years. “In other words, it literally generates positive free cash flow once every five years! According to Bloomberg, since 1997 Noble has raised from banks and markets net $7.7 billion. Noble’s debt is now almost four billion dollars.”

Noble responded, “We categorically reject the assertion that Noble exists to borrow and burn cash. In fact, our balance sheet has never been stronger. Furthermore, the time period of 20 years referenced by Muddy Waters has seen Noble grow from a company with $377 million of revenue to revenues of more than $85 billion.

“Muddy Waters have also omitted the impact that the Agribusiness has had on group results over the last few years and most importantly, the Free Cash Flow metric quoted in their report incorrectly omits the approximately $3.4 billion of cash proceeds received from the sale of our 51% interest in Noble Agri. This is an important omission given that over the past several years the group has made significant investments in its Agricultural Platform, which we substantially recouped through the sale at a premium to book value.”

To see Noble’s full response click here. 

“We are really short Noble’s management,” Muddy Waters said. “With a company as complex and opaque as Noble, there is no way for investors to definitively answer certain key questions. It becomes a question of how much investors should trust Noble’s management to be straight with them. Noble’s management has adamantly insisted that its accounting is conservative, and by implication, is reflective of reality. We do not believe Noble’s management.”