Cross-holdings, management relationships and Asiasons, Blumont and LionGold becoming 'designated' stocks

 'History is one thing. Sometimes new owners take over and they change the colours.'
- Mano Sabnani

 

UNUSUAL share price movements, boardroom battles and cornered markets.

 

If there is one distinctive characteristic among the handful of companies that have been linked to Ipco International and Innopac Holdings - including the three that were suspended by Singapore Exchange (SGX) a week ago - it would be their apparent susceptibility to major disruptions.

 

If history were an airline, that group of companies would be paying mountains in excess baggage fees.

 

On Oct 4, SGX suspended the stocks of Asiasons Capital, Blumont Group and LionGold Corp as their shares plunged right out of the gates. SGX allowed trading to resume on Oct 7, but banned short-selling and required upfront cash settlement for those three "designated" stocks.

 

Add to those three companies Ipco, Innopac, the infamous Mid-Continent Equipment Group and Links Island Holdings, now called Manhattan Resources. What you end up with is a network of cross-holdings and management relationships - and a lot of negative headlines.

 

The story starts almost 20 years ago, with a Malaysian wheeler and dealer named John Soh Chee Wen, who was known for having amassed a stable of listed companies on both sides of the Causeway. In Singapore, his vehicles were Ipco and what was then called Inno-Pacific Holdings.

 

The real trouble started in 1998, when rumours began to emerge that Mr Soh - and some of the brokerages he controlled in Malaysia - might be in financial trouble. It reached a point where the Kuala Lumpur Stock Exchange in January 1998 asked all its brokerages to report their exposure to Mr Soh.

 

Amid those concerns, Ipco in July launched an initial public offering for its Mid-Continent Equipment Group unit. MidCon lasted all of a week before regulators suspended the stock, which was eventually delisted after investigators determined that it had been cornered.

 

In 1999, Mr Soh resigned as managing director Inno-Pacific, then fled as Malaysia put out a warrant for his arrest. He finally returned to Malaysia years later, and eventually pleaded guilty to abetting acts of fraud related to some trades in Malaysia.

 

Without Mr Soh at the front, Ipco came under a highly public boardroom fight by a group of shareholders, who succeeded in replacing the board in 1999. Four years later, Ipco's board would come under another attack, but would prevail.

 

In early 2000, a company called Links Island Holdings launched its IPO. Six months later, that stock was also suspended on what was eventually found to be a case of share manipulation. It then emerged that Inno-Pacific, through a subsidiary, was the sixth-largest shareholder in Links Island.

 

A year later, Inno-Pacific had its own boardroom battle, with a number of investors who had links with Mr Soh joining the successful bid to replace Inno-Pacific's directors.

 

Back to the present and the three "designated" companies.

 

Those three companies are linked to Ipco and Innopac through numerous cross-holdings.

 

Beyond those investment holdings, Ipco company secretary Lynn Ng Su Ling is also non-executive independent director at LionGold and Blumont.

 

Jared Lim Chih Li, managing director of LionGold substantial shareholder Asiasons Capital, is also married to Dian Lee. Ms Lee runs Clear Water Developments Sdn Bhd, which is a substantial shareholder of Blumont and Innopac.

 

Regardless of whether those connections are pure coincidence, the market appears to perceive a correlation. Consider the number of trading queries that have been issued by SGX so far this year.

 

Between Jan 1 and Oct 4 this year, the seven companies mentioned so far, plus Asiasons Capital associate ISR Capital, formed 10 per cent of all the companies queried by SGX, but accounted for 18 per cent - or 16 out of 88 - of queries made.

 

Such a history can be offputting for some investors.

 

"There are some people, they avoid them," said investor Mano Sabnani. "I know there are value investors where they simply don't touch companies that they think are risky."

 

But Mr Sabnani said that investors should assess every investment based on fundamentals as well as their own risk appetites.

 

"As an investor you have to look at your own risk appetite," he said. "Are you looking for yield, are you looking for growth? Every stock, every investment has to be carefully studied."

 

History can offer some background, but circumstances can also change.

 

"History is one thing," he said. "Sometimes new owners take over and they change the colours."

 

https://groups.google.com/forum/#!topic/brokeragesreport/0f4qkg-HAIg

 

LionGold to buy, process gold waste in Ghana

LionGold, the mining company which had billions of dollars wiped off its value last month after its shares plummeted, said yesterday that its Ghana unit has signed a deal with an Australian-registered firm to buy materials left behind from old gold mining operations and reprocess them to recover additional minerals.

LionGold’s Owere Mines will buy a minimum of one million dry metric tonnes of gold-bearing waste tailings from B&C Gold over three years, it said in a statement. Income generated from the gold produced will be used to fund further exploration activities at a mine in Ghana.

“Our agreement with B&C signifies LionGold’s commitment in developing our gold mining assets organically and would jump-start production and fully utilise existing facilities at our subsidiary, Owere Mines.

“While doing our part in improving Ghana’s environment, income generated through the production of gold from purchased tailings would also fund exploration activities at our ... Konongo Gold Project,” LionGold Group Chief Executive Nicholas Ng said.

Gold-bearing waste tailings are materials which remain from old gold mining operations. They may pose a threat to the environment and the health of nearby communities if the waste leaches into groundwater.

B&C has an environmental clean-up agreement to remove all gold-bearing waste tailings from river and stream systems in land owned by two local councils.

It will be responsible for all costs and approvals associated with the mining, extraction, blending and delivery of the tailings to Owere Mines, which in turn will pay the Australian-registered firm an aggregate price based on several factors, including the amount of dry tonnes delivered and grade of the tailings.

The tailings may be able to yield about 2,550kg of gold over the three years, LionGold said. Production is scheduled to begin in March next year.

LionGold’s shares closed little changed at S$0.177 yesterday, clawing back slightly from the more than four-year low of S$0.144 on Oct 17. That is still far below the S$1.51 level seen on Oct 3, a day before the miner and two other counters were suspended by the Singapore Exchange after sharp declines in their stock prices erased S$8.6 billion in market value over three days.

They were later allowed to resume trading as “designated securities”, implying that there could have been manipulation or excessive speculation.

http://www.todayonline.com/business/liongold-buy-process-gold-waste-ghana

LionGold

LionGold Corp Ltd has rapidly established itself in the global gold mining industry and now holds 7.5 million ounces of gold resources, with 900,000 ounces classified as reserves. Since March 2012, interests in eight gold exploration and mining companies have been acquired, of which one wholly-owned subsidiary is in production. Primary concessions are in Australia, Ghana, Bolivia, and Canada.

Our focus will remain, to raise gold resources to 10 million ounces, reserves to 2 million ounces, and production to 200,000 ounces per annum by the end of 2014, through acquisitions and organic growth.

LionGold Corp Limited has rapidly established itself in the global gold mining industry and now holds 7.5 million ounces of gold resources, with 900,000 ounces classified as reserves. Since March 2012, interests in eight gold exploration and mining companies have been acquired, of which one wholly-owned subsidiary is in production. Primary concessions are in Australia, Ghana and Bolivia, and Canada. Future expansion will be achieved through further acquisitions and organic growth.

The Group aims to become a global gold producer and is initially targeting minimum gold resources of 10 million ounces, reserves of 2 million ounces, and annual production of 200,000 ounces per annum by the end of 2014. Acquisition prospects today will have scalable resources with scope for rapid enhancement. Targets include mining companies and projects across a range of geographies which are in production, or which are poised to start commercial production within 12 to 18 months. The intention behind this selective approach is to unlock asset value while building out the gold business.

http://www.liongoldcorp.com/about-us/corporate-profile/

Platinum Partners invested in Asiasons, Blumont, LionGold before share collapse

In tracing the sudden collapse of the shares of three listed Singapore-based companies with reported Malaysian links, The Edge cast a spotlight on US hedge fund Platinum Partners Value Arbitrage Fund’s role had in inflating share prices beyond their value.

According to The Edge, Platinum Partners was initially poised to pay hundreds of millions in dollars for new shares in the three firms - investment firm Asiasons Capital, gold miner LionGold Corp Ltd and natural resources investment company Blumont Group Ltd - which would have bumped up investors’ confidence and potentially yield hefty profits.

But the deals fell through after the October 4 share collapse, which saw Singapore’s market regulator stepping in to briefly suspend trading of the three’s shares and classifying them as designated shares with strict trading conditions.

“Collectively, therefore, Platinum Partners would have invested up to US$560 million (RM1.8 billion) in Asiasons, Blumont and LionGold. This would represent more than half of its assets of US$1 billion. That appears to be a hefty bet on the three companies.

“The injection of fresh funds into the three companies by Platinum Partners are supposed to be monies for more acquisitions, which would perpetuate the positive sentiment surrounding their stocks, instilling greater investor confidence and, in turn, likely push their share prices even higher,” the financial weekly said.

“Such acquisitions over the past two years have had magnified impact on LionGold and Blumont’s share prices and more recently, that of Asiasons, well beyond the actual investment amounts.

“The ‘well-laid’ plans were scuttled by the collapse in the share prices of the three companies on Oct 4,” The Edge added.

In analysing how the suprise share collapse had happened, The Edge listed down a series of events including short-selling of shares in all three firms; share-selling by an insider at Blumont and LionGold; shareholders getting wind of the risk that share prices will eventually drop as more shares continued to be issued, as well as the dumping of shares on October 4.

The Edge suggested that all these events had then triggered the price collapse on October 4.

“Firstly, the build-up in short-selling activity preceding the collapse not only capped the share price but also absorbed most of the market’s buying interest in the three companies, especially after the huge gains seen in September.

“Secondly, savvy investors might have noticed this and decided to either cash out or stay out of the game. It dawned on the market that the fundamentals of the three companies cannot back up the astronomical gains,” it said.

On Monday, international news agency Reuters reported that the three firms - whose shares’ values dropped by S$5 billion (RM12.7 billion) in under one hour of trading - were all linked through an intricate network of influential businessmen in Malaysia.

Basing it on public filings and the latest annual reports available, Reuters said Asiasons was the largest shareholder in LionGold.

Among those named by Reuters was Asiasons’ co-founder and chairman Mohammad Azlan Hashim, who is currently a director of Malaysian investment arm Khazanah Nasional and formerly the executive chairman of the Kuala Lumpur Stock Exchange.

One of LionGold’s non-executive director is Datuk Wira Dani Daim - the son of Malaysia’s former finance minister Tun Daim Zainuddin - who remains a major shareholder after recently trimmed his 6.35 stake in the company to a 4.62 stake.

Lynne Ng Su Ling is an independent director in both LionGold and Blumont, Reuters said.

http://www.themalaymailonline.com/money/article/platinum-partners-invested-in-asiasons-blumont-liongold-before-share-collap