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Tuesday, October 8, 2013

Blumont, Asiasons - Selldown continues


PETALING JAYA: Since late last week, three Singapore-listed stocks with Malaysian major shareholders have plunged for reasons still unclear, thrusting their operations, the Singapore Exchange Ltd (SGX) and Malaysian owners, who have seen a significant portion of their wealth being wiped out, into the limelight.

At yesterday’s close, Blumont Group Ltd and Asiasons Capital Ltd, whose stocks remain designated, were 93.5% and 94.4% down since last Friday. This means that a total of S$4.88bil (RM12.47bil) and S$2.5bil (RM6.39bil) of their respective market capitalisation had been wiped out over that period.

Blumont and Asiasons closed the day at 13 cents and 15 cents, respectively.

Meanwhile, Blumont said in a statement that Alex Molyneux, together with Pacific Advisers Pte Ltd had acquired some 135 million Blumont shares for 40 Singapore cents (RM1.04), representing 5.2% of the company’s total outstanding shares.

Consequently, Molyneux, who is a seasoned natural resources industry entrepreneur, executive and investor, agreed to join Blumont as chairman.

He also holds directorships with Ivanhoe Energy and Goldrock Mines. Molyneux is also chairman of Celsius Coal and Azarga Resources.

Blumont is also calling for a press conference today in Singapore to address issues surrounding its stock selldown.

Following the stock designation on Oct 4, Blumont and Asiasons resumed trading yesterday.

The third stock affected is LionGold Corp Ltd, the gold miner in which Asiasons is the single largest shareholder.

Following its designation and suspension from trading last Friday, LionGold’s trading was halted yesterday morning, but resumed trading at 2:45pm yesterday.

In the last two trading days, LionGold shaved off S$1.18bil (RM3.02bil) in its market capitalisation to close at 25 Singapore cents yesterday.

The SGX had declared Blumont, Asiasons and LionGold as designated securities last Friday. The exact basis for such a move is still not clear, but SGX officials have pointed to its rules, which state that the exchange can designate a security “if, in its opinion, there has been manipulation of the security, excessive speculation in the security, or it is otherwise desirable in the interests of markets established or operated by SGX”.

The conditions of this designation are that investors have to pay in cash for the stocks and that short selling, which is allowed in Singapore, is not allowed for these stocks.

Asiasons is controlled by Datuk Mohamed Azlan Hashim and Datuk Jared Lim, with a combined 49.3% or 483 million shares. Azlan also directly owns 14.7% or 144 million shares via his own name.

Last month, Asiasons had bought a stake in United States-based oil and gas producer Black Elk Energy Offshore Operations LLC.

Blumont counts its executive chairman Neo Kim Hock as its single largest shareholder, with a 9.67% stake.

Clearwater Development Sdn Bhd is the second-largest shareholder, with a 6.97% stake or 180 million shares. The founder of Clearwater is Dian Lee, the wife of Lim.

Asiasons, in turn, has an 8.72% stake in LionGold. Media reports have said that the stocks have suffered severe attacks by short sellers.

Bloomberg reported that trading was suspended to “safeguard the interests of the markets, as there could be circumstances that would result in the market not being fully informed”, according to a statement from the bourse.

“The concern is that short sellers are taking advantage of the weak market sentiment,” Kelly Teoh, a strategist at IG Markets in Singapore, said by telephone, the Bloomberg report stated.

Blumont had soared more than 1,112% this year through the end of September to lead gains in Singapore.

In reply, the company said this week it had held talks with 20 potential takeover targets or joint-venture partners since December.

The company sees an “unprecedented opportunity resulting from the recent severe impairment of asset prices in the mineral resources sector”, Blumont said in an Oct 2 statement.

Last month, Blumont had agreed to invest A$116mil (RM348mil) in Australia’s Discovery Metals Ltd in a deal that could give it control of the copper producer.

Still, the move by SGX to designate the stock has garnered some controversy with investors who are claiming that issues of valuation were best left to the market to decide.

“Unless there’s proof of manipulation, it does seem rather odd that the exchange had dived in suddenly to designate these stocks, after so late in their meteoric rises,” one investor said.

Asiasons Capital Group is an alternative asset investment and management group focused on opportunities in South-East Asia.

LionGold is a gold company with primary concessions in Australia, Ghana and Bolivia. Based on its website, the acquisition of a Canadian gold miner was now pending.

Blumont, meanwhile, invests in minerals and energy.

In a press release to the SGX yesterday in response to the trading activities of the company, LionGold stated that it was at an advanced stage of negotiations with Minera IRL Ltd.

“The company wishes to reiterate that no formal agreement has been executed in connection with the acquisition yet.

“In view of the suspension of trading of the shares of the company, Minera is considering whether the acquisition should proceed.

“There is no assurance or certainty that the acquisition will proceed; and there is no obligation on the part of the company to make the possible offer,” it said.

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