Blumont chairman sold stock days before plunge
Move due to ‘bank forced selling’, but investors question late disclosure
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Move due to ‘bank forced selling’, but investors question late disclosure
10 October 2013
Blumont Group executive chairman Neo Kim Hock dumped the firm’s stock just days before the counter plunged last Friday.
Mr Neo’s hasty exit from large numbers of “rights” - instruments allowing investors to buy Blumont’s shares - was disclosed in belated statements to the Singapore Exchange (SGX) on Monday.
The tardiness of the disclosures has sparked anger among some investors.
In July, Blumont announced a move to raise $43.05 million from shareholders who were given the right to buy one new Blumont share for just five cents for every two shares they already held.
These so-called “rights” can be bought and sold.
Last Wednesday, Mr Neo unloaded four million rights for $9.182 million - or $2.2955 for each right. Blumont ended five cents down at $2.39 that day.
Then on Thursday, with Blumont closing 37 cents lower at $2.02, he let go of another 3.445 million rights for $7.37 million, or $2.139 apiece.
Mr Neo did not sell any Blumont shares or its rights last Friday, when its price went into free fall, crashing by $1.14, or 56.44 per cent, to 88 cents one hour after opening bell, before the SGX suspended trading.
But on Monday, when trading resumed after the SGX restricted trading of Blumont to cash only transactions with a ban on short-selling, Mr Neo sold three million shares for $553,200, or an average price of 18.44 cents.
That sale coincided with the wild swings suffered by Blumont as panicked investors cut losses on purchases last week. It caused the counter to swing from as high as 48 cents, when it resumed trading, to as low as 11.5 cents, before it ended a staggering 85.23 per cent down at 13 cents.
In making the disclosures, Blumont told the SGX that Mr Neo’s sales of his shares and rights were due to “bank forced selling”.
The first sale of Mr Neo’s rights on Wednesday occurred a day after the SGX asked Blumont an unusually detailed query.
It wanted the firm to explain how its market value could jump from $508 million to $6.3 billion in nine months when it had only made nine acquisitions, the largest of which had a purchase consideration of $48 million.
Traders questioned the tardiness of Blumont’s disclosures. One dealer asked: “Isn’t there a legal requirement for the company to disclose any change in a director’s interest not any later than the end of the following business day? In this case, Blumont is very late in disclosing the first sale.”
Others wondered if some parties might have capitalised on the information to offload their shares first. One trader said: “On Wednesday, Blumont was still holding steady as the first sale of Mr Neo’s rights was made. It fell 37 cents on the following day, when the second sale was made. By the third day, all hell had broken loose.”
Last Thursday, Blumont disclosed that a non-executive director, Ms Ng Su Ling, sold one million of its shares for $2.38 million on Wednesday. She also sits on the board of LionGold, which came under heavy selling pressure last Friday before trading of its shares was suspended, along with those of its biggest shareholder, Asiasons Capital, and Blumont.
Trawling through the insiders’ trades shows that Ms Ng sold 335,000 LionGold shares for $393,982 last Friday just before the counter was suspended from trading. Then on Monday, she sold another 1.748 million LionGold shares for $506,675 due to forced bank sales.
Internet chatrooms were abuzz over how the seemingly unrelated firm could have been caught up in the same vicious sell-off.
One blogger noted that a firm, Clearwater Developments, owns about 7 per cent of Blumont.
“The company is linked to Ms Dian Lee, the wife of Mr Jared Lim, Asiasons’ joint managing director. How must she be feeling now that the value of the Blumont investment has melted by over $400 million?” he said.
So if the company have good vision and good plan that can work but short of fund..Does is make sense to push up the stock price get goood valulation and issue more shares to get the job done and everyone enjoy the fruit then.. Deep Thought!!