China Gaoxian's Singapore-listed shares spiked up in 2011 during the euphoria over its KDR listing in South Korea. Chart: BloombergJEROME THAM, the interim CEO who steered China Gaoxian through a lengthy, complicated and unusual resolution process, yesterday bought 550,000 warrants of the company on their first day of trading. His purchase price, as reported on the SGX website, was 2.8455 cents on average, totalling $15,650. It's not a big sum but it signals his confidence in the future of Gaoxian and its massive Huaxiang project.
Mr Tham stepped down as interim CEO on 18 Sept, the day the shares resumed trading, but remained as an Executive Director of the company.
The shares had been suspended for about two and a half years because an audit found serious financial discrepancies in the accounts of China Gaoxian, a manufacturer of premium differentiated fine polyester yarn and fabric.
Thanks to a white knight which has injected cash into the company and a variety of efforts by the Gaoxian Board, the shares have resumed trading and shareholders were issued 1 free warrant for every 2 Gaoxian shares they hold.
The exercise price of the warrants is 10 cents and they have a 5-year lifespan which ends in 2018.
With his purchase, Mr Tham now owns 600,000 warrants as he had been allocated 50,000 free warrants earlier for the 100,000 Gaoxian shares he owned.
Operations in phase 1 of the RMB1.84-billion Huaxiang project will start in 1Q of 2014.New controlling shareholder - Fleur Capital
With the resumption of trading, China Gaoxian has a new controlling shareholder -- Fleur Growth Fund which is managed by Fleur Capital, a Singapore-incorporated boutique fund management firm serving high net worth individuals in Asia.
There are 2 tranches of investment, the first of which was completed on Sept 18 and now Fleur owns 29.67% of China Gaoxian
If the Securities Industry Council grants Fleur a waiver from making a mandatory takeover offer as a result of its proposed second tranche of investment, Fleur will raise its stake to 33.77%.
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Cao Xiangbin, the chairman and CEO who mismanaged the company he founded. NextInsight file photo.If the second tranche of transactions materialise, for its investment, Fleur Capital would have been handed 510 m shares in aggregate for a nominal consideration of $1 by China Success Limited, an investment holding company wholly-owned by Mr Cao Xiangbin, the previous chairman and CEO and founder of China Gaoxian.
It is not known how Mr Cao was made to agree to hand over the 510 m shares but the outcome is clearly a financial penalty on him as the 510 million shares are worth about S$47 million based on the closing price of Gaoxian's shares on the stock market yesterday.
His has been the key role in what went wrong with the company prior to the suspension of its share trading.
In the meantime, the white knight, Fleur, is very much in the money on its investment now as its average cost works out to be 3.46 cents a share (ie $27 million divided by 780 million shares, assuming the second tranche of investment goes through).
Minority shareholders have not lost everything, as many feared. The stock price closed at 9.3 cents yesterday -- which is about half of the value prior to the suspension -- and their free warrants, 2.8 cents.
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