Blumont queries SGX's lifting of trading halt, reveals new chairman

by **Cals** Wed 09 Oct 2013, 01:42

Published: Tuesday October 8, 2013 MYT 7:13:00 PM
Updated: Tuesday October 8, 2013 MYT 7:15:09 PM
Blumont queries SGX's lifting of trading halt, reveals new chairman

SINGAPORE: Singapore-listed Blumont Group Ltd, which has lost more than S$6 billion ($4.81 billion) in market value over four turbulent trading days, questioned the wisdom of the bourse's decision to unlock its shares from suspension.
Blumont was one of three companies suspended by the Singapore Exchange Ltd on Friday after their share prices plummeted by 40 to 60 percent. The bourse said then that investors may not be fully cognizant of the companies' affairs.
On Monday, the Singapore Exchange allowed Blumont's shares to resume trading but under certain conditions. The resumption of trade saw their share price continue to slide.
James Hong, one of Blumont's executive directors, told reporters in Singapore on Tuesday that the company had expressed concern to the bourse on Sunday and that investors should have more time to digest what had happened to the stock.
"We were kind of concerned because a lot of investors might not have the full picture on what was going on. We were certain there would be a lot of panic," he said.
"That's why we consulted the exchange, telling them maybe they should hold on for a few more days," Hong added, acknowledging though that they are bound by the exchange's rules.
In response to the trading halt, Blumont put out a statement late on Friday saying it was dropping the proposed takeover of Australian-listed coal minter Cokal Ltd that it had announced earlier that day.
Blumont also said it understood a Singapore broking house had recently declared its shares as "designated securities." That means investors cannot short-sell them, and purchases via the broking house must be paid for upfront with cash.
Local brokerages sometimes put a trading limit on a stock if they believe it has run up above what they believe is a fair valuation.
The decline in Blumont's shares persisted on Monday, with the stock ending down 85 percent.
The stock only steadied on Tuesday after an announcement by Blumont late on Monday that Alexander Molyneux had agreed to acquire a 7.8 percent stake in Blumont and become its chairman. The mining industry veteran has since said Blumont will continue to invest in commodities as it aims to become "Asia's BHP."
Molyneux, who is chairman of two companies in which Blumont holds stakes, Celsius Coal and uranium investment firm Azarga Resources, told reporters on Tuesday that he approached Blumont over the weekend about investing and becoming its chairman.
"I went to Taipei where I had an engagement on Saturday, on Friday night. On the long flight there, I suddenly thought this could be an opportunity and started phone calls on Saturday," he said.
BHP OF ASIA
Blumont, which was previously involved in the packaging, property and investment sectors, started investing last year in a number of companies in sectors such as iron ore, coal, gold, uranium and copper.
Molyneux said the company will continue to invest in all stages of production in the resources sector and should become a major player in the commodities industry.
"Its strategy is not going to change, we are on our way to become Asia's BHP," he said, referring to Australian mining giant BHP Billiton , which has a market value of $166 billion.
The former resources banker with Citi and UBS, known as a deal maker, was sacked as chief executive of SouthGobi Resources Ltd last year after Aluminum Corp of China (Chalco) dropped a bid to take control of SouthGobi.
He was swept out at a time when global miner Rio Tinto , which indirectly controls SouthGobi, was dealing with other tough issues in Mongolia around its Oyu Tolgoi copper and gold mine.
He cautioned though that the sudden fall in share price would limit the company's ability to raise capital.
"Blumont is funded to do what it set out to do, I don't expect the share price to hang around here too long, but it certainly doesn't have the same equity raising capacity as a $5 billion company," he told Reuters on the sidelines of the news conference.
The Singapore Exchange lifted trading halts on Blumont, along with other companies Asiasons Capital Ltd and LionGold Corp Ltd on Sunday. But it declared the stocks designated securities.
The companies fell sharply on Monday, then rallied on Tuesday morning, before turning lower again in the afternoon.
Blumont shares closed flat at S$0.13, Asiasons ended down 22.7 percent at S$0.12 and LionGold was 24 percent lower at S$0.19.
Blumont director Hong said the company remains in an active dialogue with the Singapore Exchange.
"We are in constant communication right now, to ensure the exchange knows our plan, knows what we are doing. Of course this has to be communicated not only to the exchange, but to the investing public," he said.
Discovery Metals Ltd, an Australian copper miner and one of Blumont's recent investment targets, became a victim of the recent turmoil in Blumont's shares and saw its shares sink 18 percent to an all-time low of A$0.054.
Last month, Blumont agreed to subscribe to $100 million in convertible bonds and A$8.75 million ($8.25 million) in a share placement in Discovery Metals. The bonds have yet to be issued. - Reuters