ISR Capital ordered to hold fresh shareholder vote on contentious African mine deal

ISR CAPITAL must get investors to ratify a recent mine purchase, or risk running afoul of listing rules.

Bourse regulator Singapore Exchange Regulation (SGX Regco) slapped ISR with a notice of compliance on Thursday - the latest development over a S$3 million deal for a rare-earth concession in Madagascar.

ISR said on Dec 31, 2018 that it had sealed a deal for the 60 per cent stake in Tantalum Holding (Mauritius), after waiving an earlier condition precedent for a cash flow budget and liquidity plan.

The investment company was then asked by SGX Regco to obtain shareholder approval for the waiver before it went ahead and paid for the deal with some 747.3 million new shares.

But ISR held that such approval was not needed because the waiver did not prejudice shareholders and would not have an adverse impact on the company.

ISR went ahead with the allotment and issue of the so-called consideration shares on Jan 3, 2019.

The board also issued a statement on Jan 5, where it said that the bourse operator's communications were queries and "not a directive" to seek shareholders' approval.

Thursday's notice, signed by SGX Regco head of listing compliance June Sim, now requires ISR to hold an extraordinary general meeting "as soon as possible" for shareholders to ratify the transaction.

If the deal is not ratified in the shareholder vote, SGX Regco said, then the regulator would reserve its rights to bar the listing of the consideration shares.

Failure to comply with SGX Regco requirements "shall be deemed to be a contravention of the listing rules", the bourse regulator added.

According to its notice, SGX Regco "was concerned about whether the waiver would have a material bearing on shareholders' decision". The regulator cited how ISR's waiver was disclosed after shareholders' approval had been obtained - at an extraordinary general meeting in October 2018, more than two years after the acquisition was first floated - and just days before the transaction went through.

As for ISR's position that a cash flow budget and liquidity plan would not be a material consideration for the mining deal, SGX Regco rejoined that "the company's funding and financing ability has a material bearing on the company's ability to bring the project to completion".

The ISR board had earlier said in its Jan 5 statement that the company was in the process of responding to other queries raised by the bourse "and will be announcing its responses to these queries in due course".

It also said that the company would keep addressing regulatory queries and would comply with the Singapore Exchange's requirements, pursuant to listing rules and regulations.

ISR closed flat at 0.3 Singapore cent, before the latest announcement.

Annabeth Leow

10 January 2019