MAS aware of ISR stake sale to Rigoll, says Value Capital Asset Management
Value Capital Asset Management, the fund manager that placed
a commanding stake in ISR Capital in the hands of David Rigoll, says that the
Monetary Authority of Singapore (MAS) was aware of its transactions and the
source of its funds.
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By Leu Siew Ying, The Edge Markets
28 June 2016
Value Capital Asset Management, the fund manager that placed a commanding stake in ISR Capital in the hands of David Rigoll, says that the Monetary Authority of Singapore (MAS) was aware of its transactions and the source of its funds.
“To reiterate, VCAM is a privately held fund management company registered with MAS and they are obligated to report to MAS on their investors and source of investment funds,” says spokeswoman Rosalina Soh, of Equitique Communications, in an email exchange with The Edge Singapore.
VCAM specialises in subscribing to redeemable convertible bonds issued by small cap companies. These instruments, sometimes known as “death spiral” convertibles, have the potential to cause massive dilution, and even place control of a company in new hands.
In November 2014, Cayman Islands-based Premier Equity Fund and VCAM entered into an agreement with ISR Capital to subscribe for $35 million worth of 2% redeemable convertible bonds. The bonds are being issued in seven tranches, each composed of five sub-tranches of $1 million.
ISR Capital is charged a 5% arranger’s fee by VCAM at the close of each sub-tranche. The conversion price of the first four tranches of bonds is set at 85% of the average of the volume weighted average price at which ISR Capital shares traded on any three consecutive trading days determined by the subscriber during the 30 trading days that immediately precede the closing date of the first sub-tranche of each tranche of the bonds.
So far, the fund managed by VCAM has subscribed to all five sub-tranches of the first tranche of bonds. The conversion price was just 0.4 cent per share. As at May 13, an aggregate amount of $950,000 of the fifth sub-tranche had been converted into shares, according to ISR Capital.
VCAM sold most of the shares it converted almost immediately, with much of it going to Rigoll. On May 9, Rigoll bought 265.4 million shares in ISR Capital at 0.5 cent apiece from VCAM’s Premier Equity Fund Sub Fund G. That gave Rigoll a 28.5% stake in ISR Capital based on the 931 million shares in issue at the time. By June 13, Rigoll held 426.7 million shares of ISR Capital, or 28.56% of the 1.49 billion shares in issue.
The 0.5 cent at which VCAM’s Premier Equity Fund Sub Fund G sold its ISR Capital shares is 25% more than the 0.4 cent at which the shares were issued. However, shares in ISR Capital have rocketed since Rigoll emerged as a major shareholder of the company. The stock is now trading at 9.5 cents, or 1,800% more than the 0.5 cent at which the VCAM fund had sold its shares.
How were VCAM and Rigoll introduced? Who are the investors behind Premier Equity Fund? Did VCAM have to consult these investors about the sale of ISR Capital shares to Rigoll? “Your questions are again suggestive and seeing this straightforward fund-raising exercise in a rather complex manner,” says Soh, in an email.
In fact, the background to ISR Capital’s recent announcements isn’t straightforward, according to The Edge Singapore’s cover story this week. The company appointed Rigoll a non-executive director on May 16, and an executive director on June 16. On May 20, it said it had signed a memorandum of understanding to look into the possibility of investing in a rare earths mining concession indirectly owned by Singapore-based REO Magnetic. On June 9, ISR Capital signed an agreement with REO Magnetic to buy a 19.9% stake in Tantalum Holding (Mauritius), which owns a company in Madagascar that holds a permit to explore and develop a rare earth concession.
The largest shareholder of REO Magnetic is an individual named Jonathan Lim Keng Hock. The sole shareholder of VCAM is John Poon Seng Fatt.
In response to questions from The Edge Singapore about whether Singapore Exchange had given its approval for ISR Capital’s deals with Rigoll, the local bourse operator said that Singapore operates a disclosure-based regime, and that the market is best-placed to evaluate the commercial merits of companies and their business ventures.
“SGX’s oversight as front-line regulator is on companies’ continuous obligations including whether their disclosure of material information is timely and done in a manner which meets the standards required of listed companies. As such, SGX does not approve, nor pass judgement on the commercial merits of, the business transactions of companies.”