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Noble Group is knee deep in muddy waters

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Shares of Singapore-listed Noble Group dived to an 18-month low Thursday after Muddy Waters Research Group alleged that the commodity trader "exists solely to borrow and burn cash."

"We are puzzled by why, when given a 20-year runway, this company is still unable to stop burning cash," Muddy Waters said in a report titled Noble's Accounting: Fueling the Cash-Burning Fires. "The problem for investors is that given how prodigiously Noble chews up cash, the pressure is always on."

"We think Noble's growth is a means to no end, other than to keep the credit flowing," it said, noting Noble, which has raised around $7.7 billion from banks and markets since 1997, currently has outstanding debt of around $4 billion.

In a statement released Thursday afternoon Noble said it completely rejects the allegations made by Muddy Waters, noting it was studying the report in detail.

Noble shares fell as much as 9.3 percent mid-day to 0.835 Singapore cents – their lowest level since September 2013 – and were down around 5.5 percent at 0.86 Singapore cents in late trading.

While shares fell sharply, analyst took the report with a grain of salt.

"Like everyone else, we're in the process of looking into it," Carey Wong, an OCBC analyst told CNBC. "Some of the allegations... require time to be analyzed."

But Wong isn't worried about a potential delisting in light of recent developments: "Noble is unlikely to delist unless a substantial shareholder were to make a generous offer"

Accounting issues

In addition to questioning Noble's ability to generate free cash and repay debt, Muddy Waters accused the company of engaging in premeditated schemes "to generate unjustified and substance-less accounting gains and purging the company of evidence."

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Muddy Waters said analysis of recent Noble transactions underscored "substance-less accounting." Among transactions cited, the report said that Noble manipulated financials when it sold PT ALH in order to boost net income and avoid taking an impairment charge.

The report from Muddy Waters comes on the heels of a critical report by Iceberg Research in February criticizing Noble's financials. The report said that Noble has "unusual" accounting treatments, which resulted in "fabricated" profit that "intentionally misleads credit agencies and investors".

Noble rejected Iceberg Research's report in a statement to the Singapore Stock Exchange in February saying that all the information cited was in the public domain. In a second statement it disputed several of Iceberg's assertions, noting it has "a solid balance sheet and industry leading liquidity headroom."

Noble's market value has shrunk by a third, or around 2.56 billion Singapore dollars, since the Iceberg Research report was released, according to Reuters.

-- CNBC's Leslie Shaffer contributed to this report