BT Apr 04: Jade Tech: some questions that need urgent answers
Business Times - 04 Apr 2008
Jade Tech: some questions that need urgent answers
By R SIVANITHY
JUST a week ago, things looked pretty straightforward for anyone who bought shares of Catalist-listed Jade Technologies.
The company's major shareholder and director Anthony Soh had offered 22.5 cents a share for the 53.5 per cent of Jade he did not own via his investment vehicle Asia Pacific Links (APL). And since the letter to shareholders - prepared by financial adviser OCBC Bank - said the offer would become unconditional if APL obtained control of at least 50 per cent of Jade, everyone assumed it would be a done deal since Dr Soh already held 46.5 per cent.
One week later, it looks like the takeover could be called off. Shareholders have been shocked by news that APL had pledged shares representing about 30.47 per cent of Jade to Australian stockbroker Opes Prime for financing - a deal that has surfaced only now because Opes has been declared bankrupt.
As a result, the ownership of the 30.47 per cent of Jade is in dispute. The shares have been seized by Opes's official receiver in Australia, which means APL may own just 16.06 per cent of Jade and not the 46.5 per cent stated in the takeover offer.
If so, Dr Soh said in a letter to Jade on Tuesday, APL may not have sufficient resources to complete the takeover. If this is confirmed and the deal is called off, Jade's shares could crash back to where they were before their pre-take- over run-up - possibly around 10 cents.
This is the grim scenario that confronts Jade shareholders. So, understandably, they are anxious to have their questions answered as quickly as possible.
Not helping matters is news that OCBC has resigned as Jade's takeover adviser and that APL is looking for a replacement.
First - and perhaps most important - why did OCBC resign? Can a financial adviser resign or is there some sort of obligation - moral, fiduciary or otherwise - to stay the course, even if problems arise?
A worried Jade shareholder told BT: 'When I saw it was a solid name like OCBC and not a smaller, lesser-known company doing the deal, it gave me confidence to accept the offer. How can they just walk away like this and leave us hanging?'
Second, does the pledging of a large portion of Jade's shares to a third party in a foreign country constitute material information that should have been disclosed in the March 8 letter to shareholders? Was OCBC aware of this pledge in the first place?
Third, what rights do shareholders have if they have relied on an offer document that may have been inaccurate or incomplete?
The sentence relating to Dr Soh's presumed ownership of 46.5 per cent on March 8 read: 'At the latest practicable date, the offeror (APL) and parties acting in concert with it hold 451,272,504 shares, representing 46.55 per cent of the shares.'
Most shareholders would have assumed that 'hold' means 'own'. According to Dr Soh, he too believed he still owned the shares. Problem is, no one knows if this is the case. Much hinges on whether legally it is actually the case, or whether pledged shares can be seized by a receiver if the financier goes under.
Fourth, did the market somehow get wind of Opes's bankruptcy and Jade's involvement ahead of Tuesday, which is when Jade first made an announcement on the matter? If so, could the announcement have been made earlier?
Trading in Jade's shares progressively surged last week - from only 686,000 on Wednesday to 1.46 million on Thursday, 15.9 million on Friday and 55 million on Monday this week to a whopping 196 million on Tuesday before trading was halted. Since the first news reports of Opes's problems appeared in Australian newspapers last Friday, it looked very much like the market knew something was brewing. So why was no announcement made last Friday, or even on Monday?
As things stand now, the deal looks like being scuttled unless a competing bidder can be found - one who sees the same value in Jade as Dr Soh did. This may not be easy.
Recall that one of the reasons for the takeover offer was that Dr Soh had confidence in Jade's potentially lucrative coal mining concession in Indonesia.
However, in a report to Jade's independent directors, independent adviser CIMB-GK warned: 'There is, however, no assurance that the company will be able to execute the mining services agreement effectively.' It cited Jade's lack of a track record in coal mining and the need for sufficient funding.
All told, it is clear that most of the grey areas surrounding this convoluted saga hinge on legal questions that few people are equipped to answer - at least authoritatively.
Still, let's hope the relevant parties act swiftly to shed light on what has become one of the most controversial takeover bids in local corporate history.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
终凤信
BT Apr 07: Jade Tech now a designated stock after bid aborted
Business Times - 07 Apr 2008
Jade Tech now a designated stock after bid aborted
Investors prohibited from selling unless they show they hold sufficient quantities
By CHEW XIANG
SGX yesterday declared Catalist-listed Jade Technologies a designated security, prohibiting any selling of the shares unless the seller can show he holds sufficient quantities.
SGX said the condition was not applicable to shares that have been bought on contra, adding the designation was to ensure 'orderly trading' in the market.
Investors are fearing a heavy selldown after Jade's group president Anthony Soh pulled the plug on his takeover bid for the company on Saturday, admitting that with two-thirds of his shares in Jade pledged to a failed Australian broker, he was no longer able to guarantee sufficient funds were available to facilitate the offer.
Dr Soh yesterday confirmed in an interview with BT that the offer is under internal investigation by the Securities Industry Council. The role of OCBC Bank, which quit as financial adviser to the offeror on April 1, when the storm broke, may also be reviewed.
SGX said shareholders who had accepted the offer from Dr Soh will have their shares transferred back to their accounts today when trading resumes. Trading has been halted since Wednesday.
Early last month, Dr Soh made a 22.5 cents a share conditional offer for Jade, stating he owned about 46.5 per cent of the company. Last week, it emerged he had pledged two-thirds of his stake, or about 30.5 per cent of Jade's share capital, to Australian broker Opes Prime as security for margin loans.
But under the agreement, ownership of the shares may already have passed to Opes and when it failed, on to its secured creditors. Dr Soh and other clients of Opes claim they believed their shares had only been pledged and that they retained beneficial interest but Opes is now known to have lent those shares to banks as security for financing.
With a much smaller shareholding than thought, Dr Soh said he could not guarantee he had the extra $67 million to satisfy full acceptances of the offer.
Dr Soh told BT that Opes had operated what seemed a very attractive lending regime, providing 60 per cent credit on the value of even small cap stocks. He first pledged about 140 million Jade shares last October and had drawn down the full amount of about $25 million in loans.
When the price of Jade shares tanked in late January, Dr Soh pledged about 150 million more shares to make up the shortfall but did not borrow any more money. 'It was a very fluid arrangement but it came at a very heavy price.'
He said he suspected Opes had been lending shares to third parties after finding out in February that about 40 million of the 295.5 million shares pledged had been moved to another account. Dr Soh visited Melbourne three times in late February and early March to confront Opes's chief executive officer Laurie Emini. 'Each time he said in front of his staff that I was the beneficiary.'
Dr Soh claimed he knew of 'five to 10 other clients of Opes' in Singapore who like him had pledged shares in locally listed companies to Opes to secure financing. He is now taking part in a class action to get compensation. 'There is probably no doubt that I've lost the shares.' Dr Soh put his paper losses at about $40 million.
He said that the fundamentals of Jade have not been affected, adding he was in discussions with a Chinese buyer and a big US investment bank to come in as partners in a coal mining project in Indonesia.
A recent independent report included in the now withdrawn offer for Jade had put the value of the coal concession at about $1 billion.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.