Platinum Partners and the penny crash trio
Platinum Partners, the New York hedge fund manager whose top
men were arrested for alleged fraud on Monday, was at one point seen as a close
ally to the three companies at the heart of the 2013 penny stock crash in
Singapore.
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WONG WEI HAN
21 December 2016
Platinum Partners, the New York hedge fund manager whose top men were arrested for alleged fraud on Monday, was at one point seen as a close ally to the three companies at the heart of the 2013 penny stock crash in Singapore.
News of Platinum's role as would-be investor to Blumont, LionGold and Asiasons Capital came in a flurry around the same time as the trio's share prices were surging higher ahead of a plunge in early October that year.
The shocking crash has since led to a major securities fraud investigation, with John Soh, Quah Su Ling and Goh Hin Calm recently charged with market manipulation.
But back in 2013, investors of the three companies would have been excited over what Platinum Partners could help to achieve.
On Aug 14, 2013, LionGold announced a private placement of new shares and warrants totalling $202 million in proceeds, with Platinum Partners' PPLO fund set to take up one-third of the placement.
The proceeds were earmarked to fund future acquisitions and existing gold-mining projects. But the deal was called off on Oct 11 - right after a 90 per cent drop in LionGold's share price.
A similar scenario played out at Asiasons Capital, which on Sept 17, 2013, announced a $254 million share placement to build its coffer for future acquisitions.
This was announced together with Asiasons' plan to acquire a 27.5 per cent stake in the United States oil company Black Elk.
Platinum Partners' Value Arbitrage Fund - via introduction by Jett Capital - was to take up a quarter of the placement, but again the deal was scuttled as the agreement lapsed on Dec 15 in 2013.
There is no allegation of any wrongdoing by Platinum Partners in Singapore but these initial announcements would likely have stoked bullish sentiment and fuelled the run-ups.
Meanwhile, Platinum Partners has had a closer link with Blumont.
The company had originally pledged to purchase redeemable convertible bonds issued by Blumont for up to US$200 million (S$289.5 million), according to an announcement on Oct 18, 2013.
The sum would in turn be used to invest in copper producer Discovery Metals and other future opportunities in the mineral and energy resources sector, Blumont said. But this deal was announced on March 10, 2014, to be off.
However, on Dec 24, 2013, Blumont said it had secured a US$30 million loan facility from Wintercrest Advisors, a wholly owned unit of Platinum Partners Value Arbitrage Fund. The sum was later reduced to US$23.5 million.
Blumont was able to settle the debt just last month, after winning shareholder approval to issue some 23 billion conversion shares to Wintercrest Advisors.
The intricate web that Platinum Partners had woven in Singapore might come under further scrutiny as the fraud case unfolds in the US.
The Monetary Authority of Singapore declined to say if the US regulators have approached their Singapore counterparts for information.