SGX ordered trading suspension in 3 companies, 1st in 13 years

Within the first hour of trading, sterilization-services provider Blumont Group Ltd. had lost more than 56% of its market value, while shares of Asiasons Capital Ltd. and LionGold Corp. plunged by 61% and 42%, respectively. The declines erased a combined 4.8 billion Singapore dollars (US$3.9 billion) in market capitalization.

In separate statements, the bourse said the suspensions, all announced within six minutes, were meant ?to safeguard the interests of the market,? which might not be ?fully informed.? The suspensions were the first ordered by the bourse in 13 years on the grounds of maintaining an ?orderly, informed or fair? market.  It didn?t say when or under what conditions trading in the companies? shares might be allowed to resume.

The exchange asked the three companies to explain the declines, which followed weeks of dramatic gains in the share prices of all three.

In response, Blumont said its share price may have been affected by its proposed takeover of Australian coal miner Cokal Ltd., as well as recent trading restrictions placed on its stock by an unnamed local brokerage. The company announced before the market opened on Friday that it had agreed to a takeover of an unnamed foreign-listed coal mining company for up to S$146 million, which it revealed late Friday to be Cokal.

Asiasons?an asset-management and investment firm?said separately that it was informed of ?malicious market rumors? that the Monetary Authority of Singapore had sent a team to investigate the company, and denied these rumors.

In its response, LionGold said it was in advanced talks to buy a stake in an unnamed gold-mining company that is listed on three foreign stock exchanges. The talks could also lead to LionGold making a takeover offer, it said. The company also cited as a possible factor recent trading restrictions placed on its stock by a local brokerage.  Asiasons is LionGold?s single largest shareholder, with an 8.9% stake as of Aug. 20.

In a filing late Friday, Blumont said it has agreed with Cokal to cancel the proposed takeover ?for the time being,? as the terms had been ?materially and adversely affected? by the Singaporean company?s sharp loss in share value. Both companies would continue seeking mutually beneficial deals with each other, Blumont said.

Blumont said earlier that it planned to pay for the deal by issuing 72.2 million new shares at S$2.02 each?its closing price Thursday. Its share price fell to 88 Singapore cents before trading was suspended.

Before Friday, Blumont?s share price had risen by more than eightfold in the first nine months of the year, boosting its market value to S$6.3 billion from S$508 million. This placed Blumont?which earned just S$4.4 million in revenue all of last year?among Singapore?s top 50 companies by market capitalization. The stock rallied for nine straight sessions from Sept. 18 to Sept. 30, gaining 86% and hitting an all-time high of S$2.54 on Tuesday.

This rally prompted Singapore Exchange to ask Blumont to publicly account for the sharp gains, saying the company?s acquisitions and investments in nine companies since December?the largest of which involved a S$48 million purchase price??may not sufficiently explain the steep increase.?

In responses filed Tuesday and Wednesday, Blumont said it wasn?t aware of any unannounced information that could explain the gains. But the company listed possible factors, including its push to diversify into mineral and energy-resource sectors and the interest of foreign investors in its shares.

Asiasons? share price tumbled to S$1.04?from Thursday?s closing price of S$2.70?before trading was halted. The decline wiped out gains Asiasons had reaped over seven sessions from Sept. 9-19, during which its share price jumped nearly threefold to a record S$2.91.

Singapore Exchange had twice asked Asiasons in September about the increases. Asiasons replied on Sept. 9, saying it was ?considering and evaluating potential investment opportunities.? On Sept. 18, it said its share-price movement could be explained by its S$218 million deal to buy a 27.5% stake in U.S.-based Black Elk Energy Offshore Operations LLC, which was announced on Sept. 17.

Shares in LionGold, which invests in gold mining and exploration, fell to as low as S$0.86 early Friday?the lowest since January 2012?and were last quoted at S$0.875 before trading was suspended. They closed on Thursday at S$1.51.

The company?s share price had risen by 55% from mid-July to late August, peaking at S$1.755 on Aug. 27. LionGold announced on July 29 that it had agreed to buy Acadian Mining Corp., a Canadian gold firm, for S$9.1 million.

Analysts say Friday?s suspensions, while rare, were consistent with SGX?s previous actions. ?We need to know if the [earlier] price jump is supported by fundamentals,? said David Gerald, president of the Securities Investors Association of Singapore, referring to Blumont.

In August 2000, SGX halted trading in the shares of Links Island Holdings after the land-reclamation company?s share price jumped nearly threefold in one and a half months. The bourse later said it found that Links? shares had been ?cornered? by a group of investors?meaning they held stakes big enough to enable them to manipulate the share price. Now known as Manhattan Resources Ltd., the company resumed trading in August 2002 after meeting certain regulatory conditions.