Blumont Group Demonstrates “Creation of Market Value”

Blumont Group Executive Directors Resigned

SGX listed Blumont Group Ltd. announced the resignation of Executive Directors of the Company, Mr Ng Kim Huatt and Mr Alan Chin Yu with effect from 4 December 2017.

 

Blumont Group Filed High Court Application to Void Shares

3 days ago, the Blumont Group filed application to High Court to void part of the 4,120,000,000 shares allotted under the “2017 Award Shares” of Blumont Performance Share Plan.

As mentioned in the announcement –

Under the Rules of the Blumont Performance Share Plan, the total number of Shares available for issue under the Blumont Performance Share Plan, the Blumont Employee Share Option Scheme and any other share-based incentive schemes of the Company shall not exceed 15% of the total number of issued Shares excluding treasury shares on the day preceding the relevant date of grant of the Awards. The 2017 Award Shares constituted 14.97% of the 27,525,762,183 total issued Shares as at 12 June 2017, being the day preceding the grant of the 2017 Awards. However, the Company has been advised that when aggregated with the 2015 Award Shares, the total number of 4,335,000,000 Award Shares issued under the Blumont Performance Share Plan constituted 15.75% of the 27,525,762,183 total issued Shares as at 12 June 2017, being the day preceding the grant of the 2017 Awards, which exceeded the 15% limit prescribed under the Rules of the Blumont Performance Share Plan. The previous issuance of the 2015 Award Shares on 16 December 2015 was inadvertently not taken into account in calculating the permitted number of Shares which could be issued and allotted under the Blumont Performance Share Plan.

 

In fact, this was the 2nd attempt of awarding the “2017 Award Shares” under the performance share plan. See our previous post (Blumont Group and Its New & Ultimate Horizon) on how such issuance of ‘performance shares’ turned the group into deep net loss in the 2Q2017 financial report.

But, there is a catch.

Accordingly, in view of the foregoing, pursuant to Section 161(6) of the Companies Act (Chapter 50) of Singapore (“Companies Act”), the Company has been advised that the allotment and issuance of the 2017 Award Shares was void.

and…

the Company has today made an application to Court (i) to seek a declaration that the allotment and issuance of 4,075,000,000 Award Shares (which have not been traded on-market) is void, and (ii) to validate and confirm the allotment and issuance of the Traded Award Shares pursuant to Section 72 of the Companies Act in the interests of ensuring an orderly market in the trading of the Company’s Shares (the “Court Application”)

 

Instead of voiding the “allotment and issuance of 2017 Award Shares” (i.e.4,120,000,000 shares), the application is to void only 4,075,000,000 shares, as 45,000,000 shares were already sold on-market. => S$45,000 pocketed. (should have sold more on market isn’t it? Ouch!)

 

When share price is S$0.001, the company can “print money” by issuing new shares

 

As at 12 June 2017, Blumont Group’s total issued shares = 27,525,762,183. With share price of S$0.001, market cap of the group = ~S$27.5mil.

The group then issued additional 14.97% of shares under “2017 Award Shares” of performance share plan to 4 awardees. Blumont Group’s total issued shares = 27,525,762,183 + 4,120,000,000 = 31,645,762,183 shares. With share price still at S$0.001, market cap of the group grow S$4.12mil to S$31.6mil !!

… and the S$4.12mil went into the pocket of 5 Directors. Out of them,

  • Net worth of the Executive Director Ng Kim Huatt (resigned as of 4 Dec 2017) increased by S$2.8mil !
  • Net worth of the Non-independent Director Alan Chin Yu (resigned as of 4 Dec 2017) increased by S$0.25mil !

 

Ironically, 2 months later, a company called ‘Ultimate Horizon’ paid only S$4mil and bought over 22,011,537,185 shares (69.5% of total issued shares) via off-market married deal.

 

 

 

Price is what you paid, Value is what you get

Using this as example, by paying the price of S$4mil, Ultimate Horizon get the value of ~S$20mil (as long as Blumont Group remains listed).

 

 

P/S:

SGX Observer is waiting to see if High Court will order whoever sold the 450,000 shares to buy back the same number of shares from market, then void these shares too.

SGX Observer would think companies with share price as such should be allowed to issue new shares (a.k.a. printing money) at all, regardless of the excuses.

 

 

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