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Published April 9, 2008
Jade's designated status lifted, but questions remain
Hedge funds have also been taking up positions in the company's shares
By CHEW XIANG
(SINGAPORE) Trading in Jade Technologies will return to normal today, but market watchers say the convoluted takeover saga has thrown up many questions that need answers.
Dr Soh: His method of raising funds for a takeover is not common in Singapore, according to a brokerage director
The Singapore Exchange (SGX) yesterday lifted Jade's designated status, saying that trading in the stock has been orderly since the share was designated on Sunday. The designation meant short-selling of the counter was banned. This restriction is removed from today.
Jade shares closed at 6 cents yesterday, down 0.5 cent on volume of 72.7 million shares. This was less than half the 166 million shares that changed hands on Monday.
Jade's group president Anthony Soh had last Saturday withdrawn his offer for the company after admitting that his holdings were lower than stated, meaning he could no longer guarantee he had enough funds to continue with the bid.
He had pledged about 30.5 per cent of Jade to an Australian broker as security for margin loans but under the terms of the agreement, ownership of that block had actually passed to the broker, Opes. Opes collapsed two weeks ago and Dr Soh claims he was 'under the impression' he retained beneficial interest in the shares and only realised to the contrary on April 1, when Opes's receivers sent clients a circular.
While trading in Jade shares may have settled down, market watchers say outstanding issues remain.
The circumstances of Dr Soh's takeover offer of Jade are now under investigation by the Securities Industry Council (SIC) but many say the fact that OCBC Bank abruptly quit as financial adviser to the offeror on April 1 was very unusual.
A director at an investment bank said he could not remember the last time a financial adviser had quit while a takeover offer was underway.
When approached, OCBC Bank declined to comment.
The director of the investment bank also said Dr Soh's deal with Opes was almost never seen in Singapore as it amounted to a sell-and-repurchase agreement and 'nobody would do this, because you're effectively selling down, and the market will be nervous'. This is because those with a significant stake in a company have to disclose changes in their holdings to SGX.
He said Opes could be contravening Singapore law if it had taken ownership of a significant block of shares but failed to inform the exchange.
A lawyer noted that while Dr Soh's offer document stated he was responsible for its accuracy, a financial adviser does have to check if the offeror has enough funding. This includes making sure of the offeror's stated holdings, she said.
A director at a brokerage said that Dr Soh's method of raising funds was not common in Singapore. He said his brokerage would not provide loans similar to that provided by Opes. Dr Soh told BT in an interview on Sunday that Opes had extended 60 per cent credit on the value of the shares.
The director said: 'It depends, but usually 5 per cent is more normal. Sixty per cent is very unusual.'
It emerged yesterday that hedge funds have been taking up positions in Jade. Omni Partners LLP, a London-based fund manager, yesterday said it now has a deemed interest in 6.2 per cent of Jade shares through three funds it manages. The funds had bought 49 million Jade shares on March 31, a few days after Opes went into receivership.
Australian investigators are now probing Opes's collapse. According to media reports yesterday, British Virgin Islands holding company Riqueza, headed by a Singapore-based director, made margin calls that led to Opes's fall.
According to the Australian newspaper The Age, Melbourne underworld figure Mick Gatto is reportedly in Singapore to help Opes clients recoup their losses.
