TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issu...
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Angela Tan
20 September 2013
It can be an investor’s dream or nightmare. In just a week, Asiasons Capital Ltd, a Singapore-listed Malaysian- based investment group, saw its share price more than double from its last traded price of $1.325 on Sept 12 to $2.72 yesterday. This came after shares in the company resumed trading following a trading halt from Sept 13 to Sept 16 pending an announcement.
When the announcement finally came on Sept 17, the company said it was planning to buy 27.5 per cent of Houston-based Black Elk Energy Offshore Operations LLC’s common voting units for US$171.65 million, payable in new shares. It also revealed that it would be placing about 212.59 million new shares to four new investors at $1.1948 each to raise some $254 million in additional funds.
The two pieces of news sent Asiasons shares rallying from $1.41 at the open to close at $2.05, up 72.5 cents or 55 per cent. More than 22 million shares changed hands. The stock continued to defy the general cautious market sentiment and continued its ascent to an intra-day high of $2.91 yesterday before ending at $2.72, a staggering 105 per cent increase from its last traded price prior to its pre-announcement trading halt.
Not surprising, the latest share price hike prompted the Singapore Exchange to query the company again on Wednesday - the regulator’s second query after the first on Sept 9.
Asiasons replied that the trading activity could be attributable to its planned Black Elk stake purchase and the planned share placement.
In another response last night, it said, among other things, that the completion of the transactions is subject to due diligence.
Besides seeking more details, investors should take a closer look at the company’s fundamentals and the planned transactions, rather than simply chase after yet another oil and gas story.
For the first quarter ended March 31, 2013, Asiasons’ net profit tumbled 89 per cent to $1.76 million from the previous corresponding period’s $15.98 million. It cited lower fair-value gains. Revenue for the quarter plunged 92 per cent to about $0.45 million from $5.29 million a year earlier.
The second quarter recorded a net loss of $3.3 million.
Asiasons, which described itself as an alternative asset investment and management group focusing on South-east Asia, is hoping Black Elk will enable it “to participate in the oil and gas resource industry which will bring benefits to the company and enhance long-term shareholder value”.
But the purchase of the Black Elk stake will be funded by the issue of about 194.64 million new shares at $1.1948, a 10 per cent discount to the volume weighted average price for trades done on Sept 12.
For illustration of the financial effect, the company showed that FY2012 earnings per share would have been 0.34 cent after the acquisition against 2.99 cents before the acquisition.
The injection of $254 million by the four investors will also be dilutive as new shares will be issued.
As for Black Elk, this is a company which is in the red despite boasting an estimated total proved oil, natural gas and natural gas liquids (NGL) reserves of 45.2 million barrels of oil equivalent (MMBoe) and estimated net proved oil, natural gas, and NGL undeveloped reserves of 19.5 MMBoe.
Black Elk had a net working capital deficit of about US$71.7 million at end-December 2012. It incurred a net loss of US$64 million in the year ended Dec 31, 2012.
Things remain challenging.
In the first half of 2013, its results were hit by the continued effects of a November 2012 explosion and fire on an oil production platform that it operated in the Gulf of Mexico, which left three workers dead and many injured.
In June, credit rating agency Moody’s Investor Services changed its rating outlook on Black Elk to “negative” from “stable” on concerns over the sharp deterioration in its liquidity position and production performance through 2014.
It said its Caa2 Corporate Family Rating (CFR) reflected Black Elk’s small production and reserves base, its substantial plugging and abandonment liabilities associated with mature offshore wells.
To sustain operations, Black Elk has issued US$50 million of preferred shares to its majority private equity-holder, Platinum Partners Value Arbitrage Fund LP, which is also one of the four new investors in Asiasons.
After the planned placement, it will own 4.42 per cent of Asiasons.
Black Elk has also sold four producing fields for US$52.5 million since the beginning of 2013.
At the end of the day, there appear to be many unanswered questions and vague details.
What is clear is Black Elk is in need of funds.
As for Asiasons, no stock, not even Google or Apple, has seen such a consistent uptrend in its share price, capped by a such jaw-dropping rally, in recent days.
Given that it is now trading at a historical price-earnings ratio of 245 times, one has to ask some searching questions.