Investments gone bad

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Another low-ball privatisation offer.

SIAS tells shareholders to reject Boustead offer, which IFA calls ‘not fair but reasonable’​

Shares owned, controlled or agreed to be acquired by Boustead Singapore and its concert parties as well as valid acceptances of the offer amounted to 86.55 per cent as of March 10. PHOTO: BOUSTEAD SINGAPORE
Wong Pei Ting

Mar 13, 2023

SINGAPORE - Boustead Singapore’s bid to acquire Boustead Projects at 95 cents a share is being met with opposition, as the Securities Investors Association (Singapore), or Sias, has advised shareholders to reject the listed acquirer’s offer unless the offer price is raised to a “fair and reasonable” amount.
This goes against the recommendation of Boustead Projects’ independent directors, who said shareholders should accept the offer, unless they are able to get a price that is higher than what the open market is offering.
In a statement on Monday, Sias’ founder and chief executive David Gerald said that all exit offers for voluntary delisting must be fair and reasonable under the Singapore Exchange’s (SGX) listing rules.
Now that the appointed independent financial adviser (IFA) has assessed that the offer is “not fair” while being reasonable, he said shareholders “should not fear that the company will be delisted even if they do not accept the offer”.
This is because the company cannot exercise compulsory acquisition under Section 215 of the Companies Act, he added. The provision which he cited addresses the power to acquire shares of shareholders dissenting from a scheme or contract approved by a 90 per cent majority.
However, this can change if shareholders continue to accept the offer, since it will cause a drop in the free float, which would have to be restored, failing which the company faces delisting, Mr Gerald said.
As at March 10, the total number of shares owned, controlled or agreed to be acquired by Boustead Singapore and its concert parties as well as valid acceptances of the offer amounted to 86.55 per cent.

Gerald further called upon SGX Regulation to require Boustead Projects to restore the free float even if it loses it, as it “has not complied with the Listing Rules requirements on exit offer for delistings”.
The offer to acquire Boustead Projects at 95 cents a share – raised from the initial price of 90 cents – was launched in February.
IFA’s detailed opinion was carried in an offeree circular that was issued on Monday. It views the offer as not being fair, as the final offer price of 95 cents is not within its final estimated valuation range of between $1.17 and $1.38 for the shares.
In fact, the price represents a significant discount of approximately 29.6 per cent to the target base price of $1.35 of the latest broker research report available, it noted as one of the factors against the 95-cent offer price.
The IFA also said that the premia implied by the offer price over the company’s historical volume-weighted average price are lower than the mean and median premia of the precedent privatisation transactions.

Reasons it states for calling the offer reasonable included the fact that 95 cents comes at a premium to the historical traded prices of the shares over the one-year, six-month, three-month, and one-month periods.
“It appears likely that the market price following the offer announcement till the latest practicable date is supported by the offer,” it stated, noting that Boustead Projects’ shares closed at 83.5 cents on the last full traded day.
It also noted that the shares have been thinly traded. The highest recorded average daily traded volume was 136,966 shares, which represented 0.16 per cent of the free float for the two-year lookback period prior to the last full traded day, it said.
This may result in investors being unable to undertake transactions in larger number of shares at the intended price or a price higher than 95 cents, it stated.
Boustead Projects’ share price was flat at the offer price of 95 cents, while Boustead Singapore dropped 0.6 per cent to 86 cents as at market close on Monday.

 

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Companies must restore free float if delisting conditions not met; Boustead Projects no exception​

In the event delisting conditions are not met and free float is lost, the company’s securities will be suspended. PHOTO: BOUSTEAD SINGAPORE
Wong Pei Ting

Mar 15, 2023

SINGAPORE – Boustead Projects will be required to restore its free float should its parent company’s privatisation offer fall through, according to Singapore Exchange (SGX) listing rules and regulations.
A Singapore Exchange Regulation (SGX RegCo) spokesman on Tuesday told The Business Times (BT) that in the event delisting conditions are not met and free float is lost, the company’s securities will be suspended.
All companies in such a situation are obliged thereafter to restore free float, for example, by way of a placement.
While SGX RegCo – the regulatory arm of the SGX – maintained that it is unable to comment on specific companies, it said those who do not restore their free float may be required to delist.
They must do so while still complying with existing rules regarding delisting – including the requirement that the deal’s independent financial adviser (IFA) opines that the exit offer is both fair and reasonable, added the regulator.
Its statement comes in response to BT’s queries regarding concerns that the Securities Investors Association (Singapore) (Sias) has over continued acceptance of Boustead Singapore’s offer for its subsidiary Boustead Projects, which would cause a drop in the free float of the latter company.
Sias founder and chief executive David Gerald on Monday called upon SGX RegCo to require Boustead Projects to restore its free float in the event of its loss, as the company “has not complied with the listing rules requirements on exit offer for delistings”.

As the appointed IFA has regarded the offer as “not fair” but reasonable, Mr Gerald said shareholders “should not fear that the company will be delisted even if they do not accept the offer”.
This is because Boustead Singapore cannot exercise compulsory acquisition under SGX rules, though Mr Gerald warned Boustead Projects could face a delisting in the event that it loses its free float

 

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How to screw minority shareholders.
Instead of making a delisting/privatisation offer outright, make a voluntary general offer first.
Make a lowball offer.
The hurdle for an offer price in a general offer is lower than in a delisting offer.
The offer need not be fair but reasonable.
Mop up a few thousand, or tens of thousands, shares this way, and save similar thousands of dollars.
Then make a privatization offer.
Again, lowball the price.
Minority shareholders threw in the towel and accept the offer.
Privatisation mission accomplished at a lower cost.

Boustead Singapore’s offer for Boustead Projects still a voluntary general offer, not a delisting offer​

Boustead Singapore has made a voluntary general offer for Boustead Projects. PHOTO: BOUSTEAD SINGAPORE

Ven Sreenivasan
Associate Editor & Senior Columnist

Mar 17, 2023

SINGAPORE – Singapore’s investor watchdog has advised stockholders of Boustead Projects to reject the 95 cent share buyout offer from its parent company Boustead Singapore.
The Securities Investors Association Singapore (Sias) referred to the verdict of the independent financial adviser to the deal, who deemed the offer “not fair” but reasonable.
Sias founder and chief executive David Gerald called on Singapore Exchange Regulation (SGX RegCo) on Monday to require Boustead Projects to restore its free float in the event of its loss of its free-float status as the company “has not complied with the Listing Rules requirements on exit offer for delistings”.
Other observers have accused engineering services provider Boustead Singapore of “low-balling” shareholders of Boustead Projects, its real-estate subsidiary.
But let’s first take a step back.
This offer, launched early this month and ending on March 27, is a voluntary general offer for shares of Boustead Projects. This is different from a delisting or an exit offer.
There are two reasons why this subtle difference matters.

Firstly, a voluntary general offer does not necessarily mean that the company making the offer is looking at delisting the target firm. It may simply be looking to accumulate a bigger chunk of it (of course, cynics will scoff at this suggestion).
Boustead Singapore and concert parties have accumulated almost 89 per cent of Boustead Projects shares, just a whisker away from the threshold when it will cease to meet the SGX’s ruling on minimum free float. These parties already owned around 75 per cent of the subsidiary at the time it lodged the offer.
Singapore Exchange listing rules state that if the free float is lost, the company’s securities will be suspended. So if Boustead Singapore crosses the 90 per cent threshold, one option to restore the free float is by way of a placement of Boustead Projects shares.

However, Boustead Singapore has stated that it does not intend to take any actions to restore the free float.
If Boustead Projects’ shares remain suspended, then Boustead Singapore will likely come up with a fresh offer, one that has to meet SGX’s rules and the Security Industry Council’s Takeover Code rules, to take Boustead Projects private.
That could be a whole new exercise, but in the meantime, shareholders who remain have to face an uncertain suspension.
Secondly, the threshold for the independent financial adviser to clear the deal for a voluntary general offer is somewhat lower.

While Boustead Projects’ advisers deemed the offer “not fair” but reasonable, they also recommended that shareholders accept the offer: “Based on our opinion, we advise the Independent Directors to recommend that shareholders accept the Offer, unless shareholders are able to obtain a price higher than the Final Offer Price on the open market, taking into account all transaction costs in connection with open market transactions.”
This situation is somewhat different from an exit or delisting offer.
In such a case, an independent financial adviser has a higher threshold to rule whether the offer is “fair and reasonable”, which will have a bearing on whether the offer succeeds.
Also in a delisting offer, the will of a super-majority of 75 per cent of voting shareholders prevails. Not so for voluntary general offers.
Instead, the Takeover Code rules that the fact that Boustead Singapore’s controlling shareholder, executive chairman Wong Fong Fui, is also a substantial shareholder of Boustead Projects, obliges the offeror to appoint an independent financial adviser of its own to rule on whether its offer is beneficial (or detrimental) to its own shareholders.
In short, the Boustead Singapore’s independent financial adviser essentially has to determine whether Boustead Singapore is offering too high a price for Boustead Projects.
Many existing Boustead Projects shareholders obtained their shares for free as a dividend-in-specie in when the company was hived off from Boustead Singapore in April 2015. If they held onto all of their received shares, they would have accumulated dividends totalling some 23.2 cents over the last seven years.
So whatever funds they receive from the voluntary general offer would be “free money”. Not surprisingly, more than 1,000 Boustead Projects investors have already offered over 40 million shares to Boustead Singapore.
In a response to SGX’s queries on Thursday, Boustead Projects said it had “no control over the offer, the offer price or the opinion of the independent financial advisor”.
“The offeror’s intentions are clearly stated, namely to privatise the company and delist the company from the SGT-ST, should the option be available to the offeror,” Boustead Projects said.
Voluntary general offers are not very common in Singapore. Most offers here have tended to be outright privatisation or exit offers. In all likelihood, Boustead Singapore will end up collecting over 90 per cent of Boustead Projects shares. Then the next chapter begins.

 

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The above article by Associate Editor & Senior Columnist Ven Sreenivasan has been taken down.
Why?
Did he offend some important people or powerful vested interest groups?

 

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How to screw minority shareholders.
Instead of making a delisting/privatisation offer outright, make a voluntary general offer first.
Make a lowball offer.
The hurdle for an offer price in a general offer is lower than in a delisting offer.
The offer need not be fair but reasonable.
Mop up a few thousand, or tens of thousands, shares this way, and save similar thousands of dollars.
Then make a privatization offer.
Again, lowball the price.
Minority shareholders threw in the towel and accept the offer.
Privatisation mission accomplished at a lower cost.

Golden Energy offers improved exit terms to shareholders​

Excavators at work at Golden Energy and Resources' BIB mine in South Kalimantan. PHOTO: BT FILE

Ven Sreenivasan
Associate Editor & Senior Columnist

Mar 19, 2023

SINGAPORE – Mainboard-listed Golden Energy and Resources (Gear) has come up with an improved all-cash exit offer to shareholders in its privatisation bid.
Under the new terms, the exit offer is now 13 per cent higher at 18.1 cents.
Those opting for an all-cash payout will get an additional 79.2 cents representing the in-specie distribution of 1.3936 shares in Indonesia-listed thermal coal producer Golden Energy Mines (Gems), in which Gear has a 62.5 per cent stake.
In total, the 97.3 cents all-cash offer is 15 per cent higher than its original total offering of 84.6 cents.
However, those opting for Gems shares-plus-cash will have to settle for 96.4 cents in total value, some 7.8 per cent lower than the original offer of $1.045. The company said this is on account of the fall in Gems’ share price and the appreciation of the Singapore dollar against the Indonesian rupiah.
Retail shareholders in Singapore are most likely to opt for the all-cash offering.
This is a premium of approximately 23 per cent, 44.6 per cent, 48.3 per cent and 63.8 per cent over the volume-weighted average price (VWAP) of Gear’s shares for the one-month period, three-month period, six-month period and 12-month period respectively.

It is also higher than the price of the stock on its last day of trading on Oct 7, 2022, and when the company announced its acquisition three days later.
In addition, while the Gems shares-plus-cash offer is 7.8 per cent lower than the original offer price, it is still a premium of approximately 21.9 per cent, 43.2 per cent, 47 per cent and 62.3 per cent over the VWAP for the one-month period, three-month period, six-month period and 12-month period respectively, and including the last trading day of the stock.
The revised offer comes after shareholders criticised Gear – which is 77.5 per cent-owned by Indonesia-listed Dian Swastatika Sentosa, which is in turn 59.9 per cent-owned by Sinar Mas Tunggal – for allegedly putting out an initial “lowball” privatisation offer.
This prompted the Securities Investors Association (Singapore), or Sias, to step in earlier in March. The Singapore Exchange Regulation has also entered the fray to remind Gear’s board to ensure that its independent financial adviser (IFA), W Capital, pays attention to appropriate valuation methods and “assumptions that can withstand scrutiny”.
In particular, shareholders complained that in its original offer, Gear did not take into account the steep rise in the value of its Australian assets – Stanmore and 50 per cent-owned gold miner Ravenswood Gold Group. The listed market values of both companies have risen by more than 20 per cent over the past six months, adding significantly to the underlying value of Gear.
It remains to be seen what the IFA proclamation on the latest deal will be, and whether shareholders and Sias will give a nod to the latest offer.
The long-stop date for the satisfaction of exit conditions has been extended from April 9 to Aug 9, 2023. The extension of requirement to get shareholder approval at an extraordinary general meeting is July 9.

 

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Privatisation offers too often a dilemma for shareholders​

David Gerald

Many companies such as Osim International, Koufu and Global Logistic Properties have opted to surrender their public listing. ST PHOTO: KUA CHEE SIONG

Mar 27, 2023

SINGAPORE – Over the past decade, thanks to low interest rates, depressed valuations and poor liquidity, takeover-cum-privatisation exercises have become commonplace in the local stock market.
Many well-known companies such as Osim International, Koufu, Eu Yan Sang and Global Logistic Properties have opted to surrender their public listing.
By most accounts, this outflow is set to continue as many firms, after weighing the costs and benefits of remaining listed, decide that going private is best for them.
With the frequency with which these offers are being made, one would reasonably have thought that the process would by now be relatively smooth and seamless.
An offer is made to buy everyone out, an independent financial adviser is appointed to render an opinion on its fairness and reasonableness. The independent directors then make their recommendation on whether to accept or reject the offer, and then shareholders, after digesting this information, proceed to vote.
On paper, this sounds straightforward enough. Unfortunately, in practice, this is not the case.
Over the past month or so, retail investors have witnessed first-hand the weaknesses that plague the privatisation process. In particular, the unacceptable low-ball offers made for Boustead Projects and Golden Energy and Resources.

In both cases, the offers were too low to be deserving of serious consideration. In the case of Golden Energy, there was an inexplicable, eleventh-hour plunge in the stock price a day before the offer was announced, and no consideration given for a valuable Australian asset.
In the case of Boustead Projects, the independent financial adviser’s view was that the price was “not fair but reasonable’’, a confusing conclusion that provided virtually no guidance to the average retail shareholder.
Shareholders were then left scratching their heads when the independent financial adviser advised the independent directors to recommend that they accept the “not fair” offer.

In the view of the Securities Investors Association Singapore (Sias), it is high time for a full review of how such deals are to be handled, starting from the offeror, the boards of the target companies, the independent financial advisers appointed to advise the target companies, right up to the regulators.

The role of companies and Sias​

Sias has several times in the past publicly acknowledged that no offeror can reasonably be expected to pay the perceived full value for a company it is seeking to buy out and delist.
However, tabling ridiculous “low-ball’’ offers only serves to stir resentment, unhappiness and cries of foul play among minorities, which will inevitably bring Sias into the fray.
Sias’ stand is very clear – if the price is clearly inequitable and unfair, it will first appeal for better terms, failing which, it will do its utmost to rally minorities to vote against the offer.
This was what transpired in the case of Boustead Singapore’s offer for Boustead Projects when Sias first appealed for a better price than the 90 cents per share initially offered.
Although this was then raised to 95 cents, Sias has now urged minorities to reject it on the grounds that the independent financial adviser has deemed it “not fair’’. It remains to be seen whether the deal will pass, especially since the Singapore Exchange’s (SGX) rules require exit offers to be both fair and reasonable.
Similarly, Sias’ appeal to Golden Energy has resulted in an upward revision to the offer price, albeit modest. It remains to be seen what the independent financial adviser’s opinion will be, after SGX has weighed in on the opinion based on the terms of the original offer.
More companies should take a leaf out of GK Goh’s book, where the $1.26 per share that is on the table is almost on a par with the company’s net asset value (NAV) per share of $1.3033 as at Dec 31, 2022.
GK Goh Holdings’ founder and chairman, along with its managing director, on Feb 28 launched an offer to take it private at $1.26 per share in cash, valuing the investment company at $396 million.
Although there is undoubtedly value to still be extracted from GK Goh Holdings, the large premiums of 35 per cent to 39 per cent over the counter’s traded prices over various periods ranging from one to 12 months and the small discount to NAV would be patently fair to minority shareholders.
Moreover, although the offer is final, the offerors have reserved the right to raise it if “a competitive situation arises’’.
In short, companies should recognise that with the advent of the Internet and many educational initiatives conducted by Sias, SGX and the Monetary Authority of Singapore, retail investors are no longer as unsophisticated as they used to be, and they will rally against offers that are clearly unfair and unreasonable.

The role of IFAs and regulators​

The requirement that privatisation offers be both fair and reasonable was introduced a few years ago because opinions in the past could be one but not the other. In Sias’ view, this should be strictly adhered to, and independent financial advisers (IFAs) should not revert to saying an offer is not fair but reasonable, or fair but not reasonable.
As noted earlier, such conclusions convey zero informational content to minorities seeking expert guidance.
Perhaps regulators should study whether the investing public would be better served if the independent financial adviser’s conclusion is unequivocally whether shareholders should accept or reject the offer, rather than allow them leeway to hedge their bets with vague recommendations based on semantics surrounding “fairness’’ and “reasonableness’’.
In the case of Boustead Projects, the independent financial adviser has advised accepting the offer without explaining why, despite it being unfair.
Although the independent financial adviser has suggested that shareholders could sell in the market if they can get a higher price after accounting for transaction costs, invoking second-level thinking prompts the question of who would be the buyers in the market at a price higher than the final offer price.
At the same time, regulators should also study ways to address the inherent conflict of interest that surrounds the appointment of independent financial advisers.
The fee payment for the services of these supposedly independent evaluators would eventually be effected only after the offerors have taken control of the target companies that had supposedly appointed them, which may place them in a potential conflict-of-interests position.
While Sias has no doubt that independent financial advisers do their utmost to preserve their objectivity, it should be noted that independence has to be not just in substance, but also manifestly perceived as such.
The public should see that independent financial advisers are independent, in order to believe that they are truly independent.
Ideally, they should be nominated by SGX with clear directions that payment be made by the target company after the adviser has issued its report that is satisfactory to SGX.
Having independent financial advisers who not only claim to be independent, but are also seen to be such, would surely be congruent with the stated goal.

The role of independent directors​

Finally, it is worth examining the role of “independent directors” in privatisation offers.
The current definition of independent directors considers only those who are independent in relation to the offer when making recommendations to shareholders. This creates an untenable situation where the managing director of Boustead Projects is tasked with making recommendations for or against the wishes of the offeror, which has been his employer and paymaster for over 25 years.
Furthermore, the Boustead Projects directors were recently awarded shares in the company. Half of the shares have yet to vest, and there is no clarity on how the company will deal with the shares when they vest in August 2023.
Allowing directors to be considered independent solely in relation to the offer weakens trust in the system. Although independent of the offer, many directors making recommendations to shareholders are not independent of relationships with the offeror and/or the controlling shareholder.
Tightening the definition of independent directors to consider more factors in such privatisation situations would enhance the perceived fairness of the system.
All things considered, more can clearly be done to protect the investing public when it comes to takeovers-cum-delistings.
A radical rethink is needed, starting with companies acknowledging that low-ball offers will simply not wash because of improved investor sophistication and Sias’ presence, to independent financial advisers who render less-than-useful opinions, to the need to ensure true independence among these advisers and directors.
Offerors wishing to make exit offers must first put forward their best offer and not make low-ball ones that are unfair to shareholders of the target companies.

• The writer is founder and chief executive of the Securities Investors Association Singapore.

 

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Credit Suisse bond holders in Singapore seek to sue Swiss government over worthless investments​

The recent forced takeover of Credit Suisse triggered a write-down of the Swiss bank’s additional tier 1 or AT1 bonds. ST PHOTO: LIM YAOHUI

Tham Yuen-C
Senior Political Correspondent

Apr 17, 2023

SINGAPORE - About 30 investors in Singapore are seeking to sue the Swiss government over what they say is an unfair wipeout of their bonds during the recent forced takeover of Credit Suisse.
The troubled Swiss bank was acquired by rival UBS in March in a deal brokered by the Swiss government that triggered a write-down of the bank’s additional tier 1 or AT1 bonds.
The Swiss government had passed an emergency law before the takeover to authorise the Swiss Financial Market Supervisory Authority, or Finma, to order the devaluation of 16 billion Swiss francs (S$23.8 billion) of the bank’s AT1 debt.
Now, these bond holders are saying the move that made them lose all of their investments had breached their rights that are protected under the Singapore-European Free Trade Association (EFTA) free trade agreement, which a bloc of four countries including Switzerland signed with Singapore in 2003.
The group of investors from Singapore, who collectively owned tens of millions of the now-worthless bonds, are speaking to lawyers from WilmerHale and Engelin Teh Practice in a potential investor-state claim against the Swiss government, the law firms said.
Comprising mainly individual investors and some family offices, they are in talks with the two law firms, which are working together on the matter.
Lawyer Jonathan Lim, a partner at WilmerHale, which specialises in international arbitration, said Singaporean investors have some unique protections under the Singapore-EFTA agreement.


The treaty requires “fair and equitable” treatment of foreign investors, and this could have been breached when the bond holders were made to absorb losses ahead of shareholders, he said. It can be argued that this is against the bond holders’ legitimate expectations since they typically rank before shareholders in creditor claims when banks collapse.
The treaty also stipulates that any action by a government to take away someone’s property must not be done without compensation, and there are arguments that the complete write-down could constitute indirect expropriation, Mr Lim added.
Meanwhile, lawyer Shaun Lew, an associate director at Engelin Teh Practice, said his firm is in contact with US law firm Quinn Emanuel Urquhart & Sullivan, which has been hired by large institutional investors to seek a judicial review of the Swiss government’s actions.

Since the wipeout of the risky securities, investors around the world, including hedge funds and debt managers, have sought out law firms to explore potential litigation to recover their losses.
A huge proportion of the Credit Suisse bonds were held by big institutional investors such as Pacific Investment Management Company and Invesco, which were reported by Bloomberg to own around US$807 million (S$1.1 billion) and US$370 million respectively.
But with some $750 million of these bonds denominated in Singapore dollars, bankers say a significant amount is likely to have been held by wealthy retail investors and family offices in Singapore as well as other parts of Asia.

In Singapore, those who buy these bonds must be accredited investors. To get accreditation under Monetary Authority of Singapore rules, investors must have either a minimum income of $300,000 in the last 12 months, net personal assets of at least $2 million; or financial assets, net of any related liabilities, exceeding $1 million.
One investor in his mid 40s, who did not want to be named, said he had bought $500,000 worth of the Credit Suisse AT1 bonds about three months ago as he believed the bank was “too big to fail”.
“I was in shock when my money evaporated overnight,” he said about the day that the takeover of Credit Suisse was announced, on March 19, along with the write-down of the bonds to zero.
Since then, the entrepreneur in the food industry feels he has been left hanging with other retail investors who have not been able to join the big money managers in their legal action.
“I was relieved to hear that if we found enough bond holders, we can come together to do something about it,” he said.


WilmerHale is working with litigation funders who are open to funding the costs of the action, and Mr Lim said the potential claims are also open to AT1 bond holders from China, India, Japan and South Korea, as these countries also have treaties with Switzerland.
Another affected investor, a banker who did not want to give her name, said the move to write down the bonds was unjustified as bond holders typically come before shareholders in creditor claims when banks go under.
But in this case, bond holders were wiped out while shareholders got compensated with UBS shares worth the equivalent of 0.76 Swiss franc per share.
She did not want to disclose how much of the bonds she held, but said her total investment included a “substantial sum of parents’ retirement funds”.
She said: “I believe we have a right to seek recourse and make our voices known.”

 

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The small investor is always getting screwed by the major shareholders.

Sias tells Global Palm Resources minority shareholders to reject privatisation offer​

Mr David Gerald of retail investor watchdog Sias disagreed with the independent financial adviser that the offer for Global Palm Resources was fair and reasonable. PHOTO: ST FILE
Angela Tan
Senior Correspondent

May 8, 2023

SINGAPORE – Minority shareholders of Global Palm Resources (GPR) should reject the privatisation offer of 25 cents per share as it is “too low and unfair” and seek a higher offer, the Securities Investors Association (Singapore), or Sias, said on Monday.
In late March, GPR chief executive Suparno Adijanto, along with six family members, launched an offer to take the mainboard-listed palm oil producer private.
Sias founder and CEO David Gerald said the retail investor watchdog disagrees with the independent financial adviser (IFA) who deemed the offer “fair and reasonable”.
He noted that there are many ways to value companies and no single method will be met with universal acceptance.
“Offerors will always pitch their price as low as possible, whilst shareholders will always wish for a price that is as high as possible,” said Mr Gerald.
“The final settlement price must therefore lie somewhere in between – sufficiently fixed at a level so that there is adequate margin for offerors to extract value from their purchase, but also sufficiently high so that shareholders do not end up feeling short-changed.”
Mr Gerald took issue with how comparable companies were arrived at for the GPR offer.

He said that when doing so, the IFA had set an arbitrary market cap limit of $500 million, thus arriving at only two “comparable companies’’ listed on the Singapore Exchange (SGX) and excluding the bourse’s market leaders.
The IFA then included eight such companies that listed on the stock exchange of Indonesia, which is also an emerging market.
“Sias acknowledges this is a judgment call but urges shareholders to ask themselves whether it really is appropriate not to consider firms listed on the home market in favour of several in an overseas market when arriving at valuation metrics,” Mr Gerald said.

Sias also noted that when compared with recent going-private transactions on the SGX, the IFA listed 13 such transactions.
While the GPR offer looks attractive when compared with the volume-weighted average price due to its depressed trading price, it is substantially below the mean in terms of the price-earnings ratio and price to revalued net asset value (RNAV).
Mr Gerald said GPR’s initial public offering (IPO) price was a 118 per cent premium over the NAV at the time of listing, compared with the current offer, which is at a 22 per cent discount to the current RNAV of around 32 cents.
If the same premium were to be employed today, the offer price should be in the region of 70 cents, he said.
He added: “The question has to be asked: If the company could raise money from the public at a price that was a large premium to asset value, then why should it be allowed to buy everyone out now at a discount?”
The Sias chief also noted that as at December 2022, GPR’s revenue has more than doubled since its IPO, while earnings before interest, taxes, depreciation and amortisation are roughly 50 per cent higher and the company is in net cash position.
“In other words, given the growth enjoyed by GPR since listing and its good financial standing now, it is wholly unreasonable to offer to buy out shareholders at a discount to NAV, especially when a premium was applied at IPO,” said Mr Gerald.
Judged on its own, the present offer is clearly wholly unsatisfactory, he concluded.
In the stock market, GPR shares closed unchanged at 25 cents on Monday after 56,610 shares changed hands.

 

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Sias recommends Golden Energy and Resources shareholders reject exit offer​

President of Sias, Mr David Gerald, said the IFA has conflated the two corporate actions of the exit offer and the distribution of Golden Energy Mines shares. PHOTO: BT FILE
Benjamin Cher


MAY 31, 2023

SINGAPORE - The Securities Investors Association (Singapore), or Sias, is recommending that Golden Energy and Resources (Gear) minority shareholders reject the exit offer by the controlling shareholders.
Minority shareholders have been asked to accept the distribution in-specie of Gear’s Golden Energy Mines (Gems) stake and the cash alternative at 79.2 cents per Gear share.
In an e-mail to Gear’s board of directors, Mr David Gerald, president of Sias, said that the independent financial adviser (IFA) had conflated the two corporate actions of the exit offer and the distribution of Gems shares. This was despite the issue being highlighted as a concern in a press statement by Sias after meeting Gear representatives.
Gear’s offeror Duchess Avenue, a company linked to the Widjaja family, has offered 18.1 cents per share, with the offer linked to the distribution in-specie of Gear’s Gems stake. The IFA, W Capital Markets, issued a “fair and reasonable” opinion on the delisting proposal.
Mr Gerald wrote: “Clearly, Stock Exchange of Singapore (SGX) RegCo’s reminder to the IFA regarding the utilisation of appropriate valuation methodologies and the necessity for analysis supported by reasonable grounds and assumptions capable of withstanding scrutiny has seemingly fallen on deaf ears.”
Referencing Monday’s edition of the Mark to Market column in The Business Times, “Golden Energy’s delisting: IFA opinion is faulty”, Sias said that it has from the onset cautioned the IFA against conflating the two corporate actions.
In the column, senior correspondent Ben Paul had pointed out that the IFA has reduced the value of the Gems’ share distribution in its model by as much as 42 per cent from 6,500 rupiah (59 Singapore cents) to between 3,773 rupiah and 4,277 rupiah.


Subsequently, the IFA’s sum of the parts value for Gear was between $1.041 and $1.104.
Sias questioned the new valuation metric introduced by the IFA, enterprise value (EV) to trailing 12-month (TTM) earnings before interest, taxes, depreciation and amortisation (Ebitda). This approach generalises companies that are too different, especially one going private with no future price discovery.
The inclusion of a 0.44 EV/TTM Ebitda Indonesian company as comparable to Gear was also questioned by Sias. The company is only a fifth of Gear’s size, and its selection lowered the EV/TTM Ebitda ratio.

There are a number of questions Sias has for the IFA, such as: How was the TTM Ebitda metric calculated, and was it from audited results? How does the market capitalisation of the selected companies, which ranged from US$354 million to US$6 billion, impact the multiple?
“There are simply too many judgment calls made that only prompts further questioning of the IFA’s approach,” said Mr Gerald.
While Sias acknowledged that there are many ways to value companies and there is no single method that is universally accepted, it noted that the IFA has heavily emphasised the EV/TTM Ebitda metric, leading to a lower bound.
The opinion of the IFA does not withstand scrutiny nor meet the expectations set by SGX RegCo, said Sias. It called on the IFA to incorporate more valuation methodologies in its analysis and justify any judgment calls in the process.
Sias is urging the minority shareholders to make their voices heard by making their vote count.
The resolutions require 75 per cent approval from minority shareholders. But the resolutions are inter-conditional.
“Should minority shareholders reject the exit offer, Gear will remain on SGX holding on to its valuable Stanmore stake along with Gems’. After months of hard work, shareholders go back to square one,” said Mr Gerald.
Shares of Gear closed down 1.05 per cent at 94.5 cents on Wednesday. THE BUSINESS TIMES

 

[LITTLEREDDOT]

Golden Energy’s independent financial adviser hits back at Sias’ recommendation to reject exit offer​

IFA laid out explanations for valuing the shares of Golden Energy Mines and its valuation methodologies for the exit offer. PHOTO: THE BUSINESS TIMES
Benjamin Cher

MAY 31, 2023

SINGAPORE - W Capital, the independent financial adviser (IFA) in the exit offer for Golden Energy and Resources (Gear), has hit back at criticisms of its opinion by the Securities Investors Association (Singapore), or Sias, and a senior correspondent of The Business Times.
In two separate statements, the IFA laid out explanations for its approach to valuing the shares of Golden Energy Mines (Gem), its valuation methodologies for the exit offer and its opinion.
Gear shareholders are to vote on two resolutions – a distribution in-specie of Gem shares and an exit offer of cash for Gear shares.
In valuing the Gem shares, W Capital said that the trading liquidity for the shares in the past 12 months had been low, with its average daily trading volume of 127,500 shares representing 0.029 per cent of the free float.
The IFA was thus of the view that the market prices of Gem shares may not necessarily serve as a meaningful reference point or indication of fair value.
The low free float and liquidity of the shares led the IFA to adopt the market approach to value Gem shares based on the enterprise value (EV) to earnings before interest, depreciation and amortisation (Ebitda) multiples of selected comparable companies.
EV to Ebitda is a financial metric used to evaluate the value of a company compared with its earnings.

W Capital also offered explanations for its valuation methodologies for assessing the distribution and exit offer. It said Sias’ allegation that the IFA had over-emphasised EV to Ebitda to set a lower bound was “grossly inaccurate”.
Sias had questioned the valuation methodology adopted by the IFA on the grounds that it was too generalised for the comparable companies.
Mr Wayne Lee, the chairman and chief executive of W Capital, said the methodology it used “is one of the most commonly used and acceptable valuation methodologies”, and “the most appropriate approach to be adopted in arriving at the estimated range of values of the shares”.
The reason for not including the entire list of Indonesian comparable companies for the Gem comparable-companies list was to prevent a skewing towards listed Indonesian thermal coal producers’ trading multiple. Instead, the IFA wanted a more comprehensive list of Singapore-listed, Australia-listed and Indonesia-listed thermal and metallurgical coal mining companies to better reflect Gear’s business profile.
W Capital also hit back at Sias’ allegation that it conflated the distribution and the exit offer. The IFA cited the letter from the Singapore Exchange, which required W Capital’s opinion to state whether the distribution and exit offer, when taken together as a single transaction, were fair and reasonable.
“The IFA letter, as contained in the circular, complies with SGX-ST’s (Singapore Exchange Securities Trading’s) directions, and there has therefore been no deliberate
The IFA acknowledges that no single method of valuation will be met with universal acceptance and humbly respects differences in views and opinions.
“The board of W Capital Markets would like to put on record that we have always been mindful and use our best endeavours to ensure that we exercise due care, skill and professional judgment in all advisory engagements, and we firmly believe that our IFA opinion in respect of the proposed distribution and exit offer is supported by reasonable grounds and assumptions,” he added.
Shares of Gear closed down 1 per cent to 94.5 cents on Wednesday.

 

[k1976]

All huat big big projects why sudden goes belly up hah?

 

[LITTLEREDDOT]

SGX RegCo to have new guidelines on independent financial advisers after spate of lowball offers​

Recent complaints over the roles IFAs play and their independence in rendering an opinion have prompted the authorities to move to clear the air. PHOTO: ST FILE
Claire Huang and Kang Wan Chern

June 29, 2023

SINGAPORE - A new set of guidelines on the work of independent financial advisers (IFA) is being ironed out and will give the market much-needed clarity, particularly with regard to exit offers for listed companies.
Recent complaints over the roles IFAs play and their independence in rendering an opinion have prompted the authorities to move to clear the air, a market source told The Straits Times.
He said the Singapore Exchange Regulation (SGX RegCo) “wants to be fair, so they are going to define what is independent and how IFAs should write their reports”.
In a reply to queries, SGX said the role and responsibilities of IFAs have come under public and media scrutiny.
“After considering market feedback and following engagements with relevant stakeholders, SGX RegCo intends to spell out shortly our expectations of directors when appointing IFAs, as well as of IFAs when arriving at their independent opinion,” it added.
IFAs must be appointed to provide an independent opinion for interested-party transactions, whether one-off or recurrent, in exit offers, and where SGX RegCo has directed a listed issuer to obtain such an opinion under a Notice of Compliance, an SGX spokesman said.
This comes after recent privatisation offers by the major shareholders of several SGX-listed companies, some of which were seen to be too low for minority shareholders, many of whom had bought their shares at much higher valuations and continued to support those firms through the years.

Under Rule 1309 of the SGX Rulebook, once a privatisation offer is made for a company, the target company should appoint an IFA who must opine that the offer made is fair and reasonable.
The independent directors then make their recommendations on whether to accept or reject the offer based on the IFA’s opinion. Using this information, shareholders then proceed to vote on the offer.
However, privatisation offers are almost always set as low as possible, and typically also come after the target company has suffered from low trading volumes and depressed share prices for a long period.
Additionally, as the IFA is appointed by the target company, which in turn may already be controlled by the offeror, concerns have been raised over how it decides on what is really fair and reasonable to minorities.
In the case of Boustead Singapore’s offer for Boustead Projects earlier this year, the offer price was judged to be not fair yet reasonable, and the recommendation was still to accept it.
In a June 19 column for The Straits Times, president of the Securities Investors Association Singapore David Gerald noted that the IFA does not consider the specific investment objectives, financial situation, risk profiles or unique needs and constraints of the shareholders when rendering its opinion. The IFA also fully relies on information provided by the management and directors, including relevant financial analyses and estimates, for which it does not independently verify and does not accept responsibility for.
While no offeror can reasonably be expected to pay the perceived full value for a company it is seeking to buy out and delist, “tabling ridiculous lowball offers only serves to stir resentment, unhappiness and cries of foul play among minorities”, said Mr Gerald.
“Until this issue of ensuring true independence is addressed, individual shareholders should view IFA reports and conclusions through a sceptical lens.”

 

[k1976]

SGX RegCo to have new guidelines on independent financial advisers after spate of lowball offers​

Recent complaints over the roles IFAs play and their independence in rendering an opinion have prompted the authorities to move to clear the air. PHOTO: ST FILE
Claire Huang and Kang Wan Chern

June 29, 2023

SINGAPORE - A new set of guidelines on the work of independent financial advisers (IFA) is being ironed out and will give the market much-needed clarity, particularly with regard to exit offers for listed companies.
Recent complaints over the roles IFAs play and their independence in rendering an opinion have prompted the authorities to move to clear the air, a market source told The Straits Times.
He said the Singapore Exchange Regulation (SGX RegCo) “wants to be fair, so they are going to define what is independent and how IFAs should write their reports”.
In a reply to queries, SGX said the role and responsibilities of IFAs have come under public and media scrutiny.
“After considering market feedback and following engagements with relevant stakeholders, SGX RegCo intends to spell out shortly our expectations of directors when appointing IFAs, as well as of IFAs when arriving at their independent opinion,” it added.
IFAs must be appointed to provide an independent opinion for interested-party transactions, whether one-off or recurrent, in exit offers, and where SGX RegCo has directed a listed issuer to obtain such an opinion under a Notice of Compliance, an SGX spokesman said.
This comes after recent privatisation offers by the major shareholders of several SGX-listed companies, some of which were seen to be too low for minority shareholders, many of whom had bought their shares at much higher valuations and continued to support those firms through the years.

Under Rule 1309 of the SGX Rulebook, once a privatisation offer is made for a company, the target company should appoint an IFA who must opine that the offer made is fair and reasonable.
The independent directors then make their recommendations on whether to accept or reject the offer based on the IFA’s opinion. Using this information, shareholders then proceed to vote on the offer.
However, privatisation offers are almost always set as low as possible, and typically also come after the target company has suffered from low trading volumes and depressed share prices for a long period.
Additionally, as the IFA is appointed by the target company, which in turn may already be controlled by the offeror, concerns have been raised over how it decides on what is really fair and reasonable to minorities.
In the case of Boustead Singapore’s offer for Boustead Projects earlier this year, the offer price was judged to be not fair yet reasonable, and the recommendation was still to accept it.
In a June 19 column for The Straits Times, president of the Securities Investors Association Singapore David Gerald noted that the IFA does not consider the specific investment objectives, financial situation, risk profiles or unique needs and constraints of the shareholders when rendering its opinion. The IFA also fully relies on information provided by the management and directors, including relevant financial analyses and estimates, for which it does not independently verify and does not accept responsibility for.
While no offeror can reasonably be expected to pay the perceived full value for a company it is seeking to buy out and delist, “tabling ridiculous lowball offers only serves to stir resentment, unhappiness and cries of foul play among minorities”, said Mr Gerald.
“Until this issue of ensuring true independence is addressed, individual shareholders should view IFA reports and conclusions through a sceptical lens.”

Roti Prata say Not Fair = Reasonable?
Logic error liao

 

[LITTLEREDDOT]

FTX blow-up is ‘an aberration’ in early stage investments: Temasek CEO​

(From left) Temasek’s chief investment officer Rohit Sipahimalani, deputy chief executive Chia Song Hwee, executive director and CEO Dilhan Pillay and chief financial officer Png Chin Yee at the annual Temasek Review on July 11. ST PHOTO: JASON QUAH

Claire Huang
Business Correspondent

July 11, 2023

SINGAPORE - The blow-up of disgraced American cryptocurrency exchange FTX is “an aberration” in early stage investments, Temasek Holding’s chief executive said, adding that it is “very difficult” to determine how an investment will turn out from the start.
In early stage investing, one has to accept the binary outcome of the investment, said Mr Dilhan Pillay, who is also Temasek’s executive director.
He said in the case of FTX, which resulted in the group writing off its US$275 million (S$369 million) bet on the firm, the blow-up was to do with what is perceived to be individual actions, in a reference to FTX founder Sam Bankman-Fried.
Bankman-Fried is accused of conspiracy to commit mail and wire fraud, as well as orchestrating the theft of billions of dollars of customer assets, following the collapse of FTX in November 2022.
Temasek said in late May that it would cut the pay of its investment team and senior management as a result of the FTX debacle, although no misconduct was found. The one-off pay cut was reported to have been carried out.
Speaking at the Singapore state investor’s annual review on Tuesday, Mr Pillay said the investment team and senior management decided to take a pay cut because of the reputational damage from the FTX incident, particularly as the implosion came so soon after the investment was made. Temasek had pumped money into FTX across two funding rounds from October 2021 to January 2022.
When asked why no one was let go as a result of Temasek’s poor investment in FTX, Mr Pillay said: “If you were to start to punish people beyond what we’ve done, who would want to be an investor?”

He added that as an investor, one takes calibrated risks, and “as long as you’ve done the work required to make the investment, the committee approves it, it goes forward”.
However, should an investment turn sour and negatively impact Temasek’s reputation, more punitive actions such as pay cuts could be taken, Mr Pillay said.
This is “to remind ourselves that every time we do something, the issue is not just the financial risk associated with the investment, it’s the reputational risk associated with us, and we take that very seriously,” he said.

Mr Pillay noted that most of Temasek’s investments have done well and very few have done very badly, like FTX. Others had started off performing well but became progressively worse, either due to external market conditions or internal conditions.
The state investor had held a 1.5 per cent stake in FTX and the investment constituted 0.09 per cent of its $403 billion portfolio as at end March 2022.
The group was one of the exchange’s largest external investors, alongside Sequoia Capital and Canada’s Ontario Teachers’ Pension Plan. In November 2022, Sequoia wrote down the full value of its US$214 million investment in FTX.
Mr Rohit Sipahimalani, Temasek’s chief investment officer, said at the briefing that “FTX clearly was a situation we’re all disappointed with”.
He said Temasek caps the exposure to early-stage companies at 6 per cent of its total portfolio, of which half are venture capital funds and the other half comprise over 200 companies that included FTX.
“We invested in FTX because at that time, it seemed like a company having good technology, it was rapidly gaining market share and all the checks with regulators suggested that they were very regulatory compliant and wanted to get licensed everywhere, so all that led us to invest in that company,” said Mr Sipahimalani.

He added that lessons have been learnt and that the group has enhanced its due diligence processes in the hopes of avoiding such situations in future, while “recognising that fraud is something that is difficult to protect against completely”.
Looking ahead, the group has built what it calls the “Temasek operating system” as part of its 2030 strategy.
This refers to a suite of specialised, next-generation capabilities in five areas – artificial intelligence (AI), blockchain, cyber security, data and digital, and sustainable solutions.
Temasek’s deputy chief executive Chia Song Hwee said these capabilities will be essential for the future and could differentiate the group as a value-adding investor and shareholder.
For now though, the group is trying to understand more about the business-to-business applications of AI and its investment in this area is “still a very small portion” of the portfolio, he said.
Mr Sipahimalani said the group will continue to invest in established tech companies as it is clear they will be winners, but said Temasek is less excited about investing directly in some of the start-ups for now as their revenue models are unclear and valuations are high.

 

[LITTLEREDDOT]

Singapore Reits hammered by interest rate fears as bond yields soar​

Capitaland Ascott Trust is one of the highly rated Reits that have taken a hit from interest rate fears. PHOTO: ASCOTT

Ven Sreenivasan
Associate Editor & Senior Columnist

Oct 4, 2023

SINGAPORE – While the higher-for-longer outlook for interest rates has mauled stock markets, the real estate segment, and in particular the Reits sector, has borne the full force of the sell-down this week.
Many Singapore-listed real estate investment trusts, commonly referred to as S-Reits, are trading close to 52-week lows as US 10- and 30-year government bond yields climbed to their highest levels since 2007 following strong jobs data in the United States.
Even top-tier issues like CapitaLand Ascott Trust (Clas), ESR-Logos Reit, Frasers Logistics & Commercial Trust, CapitaLand Integrated Commercial Trust (CICT) and CapitaLand Ascendas Reit have been hammered down to their lowest levels in 2023 as investors run for cover.
Clas, for one, tumbled 3.2 per cent to 91 cents as at 2pm on Wednesday, while CICT was trading down 1.6 per cent to $1.80. Both counters last closed below those levels in late October 2022.
Reits have traditionally been investor favourites as they tend to pay out higher dividends than other listed issues.
In the Reit-heavy Singapore market, these trusts have yielded dividends averaging around 6 per cent annually over the past 10 years, compared with about 3 per cent for the broader market. This is because Reits pay out 90 per cent of their taxable income as dividends in order to qualify for tax exemption.
But the yield from dividends now seem to pale somewhat compared with other risk-free money market opportunities like government bonds and bank deposits, say analysts.

“I think the renewed hawkish tone of the Fed in September is hammering home the higher-for-longer interest rate narrative,” Mr Thilan Wickramasinghe, head of equity research at Maybank Securities.
“This is shifting the yield curve higher, narrowing the spread between the dividend yield of Reits and risk-free government securities. While valuations look cheap, they are not yet value until a lower interest rate trend emerges.”
Bank fixed deposit rates are now well over 3.5 per cent, while the yield for the latest Singapore dollar six-month Treasury bill jumped to 4.07 per cent.

There is also the fear that Reits, which are heavily geared, could be burdened with significantly higher interest costs as rates stay higher for longer.
The Singapore Overnight Rate Average (Sora), the interest rate benchmark for housing loans and most consumer and corporate loans, remains stubbornly above 3.7 per cent. Banks generally charge a premium above Sora for loans.
While the US Federal Reserve left its key borrowing rate unchanged at its September meeting, it is seen as likely to make at least one more rate hike later in 2023 as rising energy prices and a tight US labour market threaten to refuel inflation.
On Tuesday, a surprise jump in US job openings in August was the latest trigger for bond selling and has traders worried that broader labour figures due on Friday could strengthen the case for US interest rates to stay high or go higher in the coming months.

Analysts see little respite for rates or Reits any time soon.
“With interest rates expected to stay high for longer, this will continue to be a drag on market sentiment and will especially impact interest rate-sensitive sectors like property and Reits,” said Ms Carmen Lee, head of OCBC Investment Research.
That said, there is general consensus that quality Reits provide an opportunity for investors with a medium-term horizon. The general expectation is that rates will plateau through early and mid-2024, and possibly pull back by the third quarter of 2024.
If so, those holding beaten-down high-quality S-Reits may enjoy strong yield flows going into 2025.
Maybank Securities’ Mr Wickramasinghe said this higher rate environment does not mean ignoring the whole sector.
“There are bottom-up opportunities that offer upside potential as the cycle turns. We like the industrial Reit sub-sector as it will be a major beneficiary of supply chain migration from North Asia to South-east Asia and can leverage Singapore’s precision manufacturing ecosystem,” he said.
In the meantime, expect rate-induced volatility to hit financial markets.

 

[LITTLEREDDOT]

SGX RegCo directs Boustead Projects to delist, with exit offer for shareholders​

SGX RegCo directed Boustead Projects and/or Boustead Singapore to make an exit offer within one month from Tuesday. PHOTO: BOUSTEAD SINGAPORE
Raphael Lim

SEP 27, 2023

SINGAPORE - Singapore Exchange Regulation (SGX RegCo) issued a directive on Tuesday for the delisting of Boustead Projects, as the issuer had not ensured that at least 10 per cent of the total number of issued shares are held by the public.
In its notice of compliance, the front-line regulator also directed Boustead Projects and/or Boustead Singapore to make an exit offer to the shareholders that is “fair and reasonable”, with the proposal to be provided within one month from Tuesday.
Boustead Singapore in February announced a voluntary unconditional general offer to privatise its real estate unit, Boustead Projects. The initial offer price was 90 cents per share, and this was subsequently raised to 95 cents per share on Feb 22.
The independent financial adviser, PrimePartners Corporate Finance, opined that the offer was “not fair but reasonable”.
At the close of the offer, Boustead Singapore and its concert parties owned or controlled an aggregate of 299.2 million shares, representing approximately 95.5 per cent of the total number of shares in the company.
However, Boustead Singapore disclosed it would not be able to avail itself to the powers of compulsory acquisition under the Companies Act. As less than 10 per cent of Boustead Project shares were held by the public, the counter was suspended in March.
Boustead Projects was granted two extensions to explore options to comply with listing rules, but did not restore its free float by the Sept 26 deadline, leading to the notice of compliance and delisting.

In a statement to The Straits Times, Mr David Gerald, president of the Securities Investors Association (Singapore), or Sias, said it supported SGX RegCo’s move.
“Boustead Projects was directed to comply with free float requirement or be delisted. Boustead Holdings was directed to make a fair and reasonable exit offer, as the free float of Boustead Projects has not been restored.
“Some six months have elapsed and there has been no response from the Boustead companies,” he said, adding: “Sias supports the SGX action.”
Shares of Boustead Singapore rose 1.2 per cent on Tuesday to 86.5 cents, before the announcement. Boustead Projects last traded at 95.5 cents in March. THE BUSINESS TIMES

 

[LITTLEREDDOT]

Cordlife shares sink over 40% after storage lapses damage thousands of clients’ cord blood units​

MOH said on Nov 30 that Cordlife Group was found to have exposed cryopreserved cord blood units at suboptimal temperatures, damaging the units. PHOTO: CORDLIFE GROUP

Sue-Ann Tan
Business Correspondent

DEC 1, 2023


SINGAPORE – Shares of Cordlife Group plunged more than 40 per cent on Dec 1 after the Ministry of Health (MOH) found that the company had damaged cord blood units belonging to at least 2,150 customers, making these unsuitable for stem cell transplant purposes.
The stock was down 40.7 per cent to 27 cents at midday, after closing at 45.5 cents the previous day. It opened trading on Dec 1 at an all-time low of 16 cents. It then recovered some ground to trade at 26 cents. The last time the counter closed at this price was on March 30.
It eventually closed at 31 cents on Dec 1, nearly 32 per cent down from the previous day’s close.
Over 1.2 million shares changed hands, a marked increase in activity for the stock. Only 21,000 shares were traded on Nov 30.
MOH said on Nov 30 that the cord blood bank was found to have exposed cryopreserved cord blood units at suboptimal temperatures, damaging the units.
It has been ordered to stop collecting, testing, processing and/or storing any new cord blood and human tissues for up to six months. It is also not allowed to provide any new types of tests to patients.
Investigations are still ongoing and MOH said it will consider further enforcement action.

Cordlife Group is the first cord blood bank in Singapore. It owns seven facilities across the region and says it serves more than 600,000 parents in Asia.
In a media statement, the firm said this was the only time that such incidents had happened in the company’s 22 years of storing cord blood here and regionally.
The company will continue storing the damaged cord blood units for its clients until their child turns 21, in case these are still valuable with new developments in cell and gene therapy.
Cordlife Group has 14 days to make any representation to MOH.

 

[k1976]

Black Swan event?

 

[k1976]

BTFD?

 

[k1976]

Alot old savvy lao hero has many many Balai huat big big idea de