Compact Metal Industries

[ACTIVIST SPEAKS]

On 2 Mar 17, Compact Metal informed shareholders that the it has received a notification from SGX that it is unable to grant an extension of time for the company to satisfy the requirements for removal from the Watch-list.

On 3 Mar 17, SGX informed the company that its shares would be suspended from 3 Apr 17. 

Pursuant to Listing Rule 1306, the issuer or its controlling shareholder(s) must comply with Listing Rule 1309 which provide inter-alia an exit offer to will be made available to the shareholders. 

Trading of the Company’s securities will continue until  31 Mar 17 and remains suspended from 9 am on 3 April 2017 until completion of exit offer.

LISTING RULE 1306
If the Exchange exercises its power to remove an issuer from the Official List, the issuer or its controlling shareholder(s) must comply with the requirements of Rule 1309. For purposes of Rule 1309, a reasonable exit offer may include a voluntary liquidation of the issuer's assets and distribution of cash back to shareholders.

LISTING RULE 1309
If an issuer is seeking to delist from the Exchange:—
(1) a reasonable exit alternative, which should normally be in cash, should be offered to (a) the issuer's shareholders and (b) holders of any other classes of listed securities to be delisted.
(2) the issuer should normally appoint an independent financial adviser to advise on the exit offer.

[ACTIVIST SPEAKS]

Business Times By FELDA CHAY 2012

WITH minority shareholders often handed the shorter end of the stick in mandatory delistings, Singapore Exchange (SGX) should give more thought and explore all possible options before taking away a firm's status as a public listing.

That is the view that some market watchers have after a statement from the regulator was interpreted by them to mean that it had the rule in place requiring an exit offer to be made for involuntary delistings, but appeared to be unable to enforce the regulation if a company chose not to buy out its smaller investors.

SGX, in a letter to BT, said that 12 of the 15 mandatory delistings that occurred since January last year were allowed to happen, even though an exit offer was not made, because their board of directors said they were in negative equity positions. Two firms that were struck off put an offer on the table.

Only one company, General Magnetics, was in a positive equity position. The company, however, 'did not make an exit offer despite repeated communications from SGX', the exchange said. Still, it was delisted on schedule.

The exchange's letter was in response to commentaries in BT on how firms were removed from public listings even though they did not provide an exit offer to minority stakeholders.

'It may appear to be like a doctor who is slow to treat but ready to turn off the life support system,' said Mak Yuen Teen, an associate professor at the National University of Singapore who comments on corporate governance issues in a letter to BT.
'The SGX's willingness to enforce mandatory delistings without doing more to press companies to comply with other conditions for such delistings, coupled with its lack of monitoring and enforcement of its listing rules in other areas (such as the 'comply or explain' requirement for the code of corporate governance)', may lead to questions on what drives its actions, said Prof Mak. He added that the exchange, as a listed company with commercial and regulatory roles, 'must be especially consistent and transparent in its regulatory actions'.

Under SGX rules, companies fall into the watch-list if they clock up pre-tax losses for the three preceding fiscal years and their market cap falls below $40 million over the last 120 trading days.

They have two years to exit from the list or risk delisting. To be removed from the watch-list, a company needs to report a pre-tax profit for the most recently completed financial year and to have an average market cap of at least $40 million in the last 120 trading days.
Noting that 12 of 15 companies were allowed to delist without an exit offer because their boards said they were incapable of making one, Prof Mak said: '. . . not doing anything more just because the company says it is unable to provide an exit offer is just not good enough, especially when the SGX rules promise more'.

He suggested that SGX direct these troubled companies to appoint an independent party to give an opinion on the fair value of the company, and to advise minority shareholders on their options should an exit offer not be forthcoming.

If the board refuses to comply with this direction, then the SGX should consider reprimanding the directors, he said.
'In a mandatory delisting, the SGX has effectively taken away that right of shareholders to approve the delisting. While I am not against the SGX using a mandatory delisting as a last resort, it is important for the SGX to enforce its rules.'

In its letter, SGX also said that 'under the law, it is only creditors and shareholders who have the powers to liquidate or wind up companies, and distribute the assets to shareholders'.

Yap Wai Ming, a partner at Stamford Law, noted that minority shareholders can try to wind up a company, but they are still unlikely to walk away with a payout. This is because a special resolution needs to be passed with 75 per cent of shareholders in favour of liquidating the firm - which has to be solvent.

'Minority shareholders won't get that 75 per cent that they need to get the resolution passed because the majority shareholders won't be in favour of this,' said Mr Yap, adding that these investors are 'at the mercy' of the larger shareholders.
'If the company is insolvent, there is no point winding up the firm at all because the minority shareholders won't get anything. The creditors will come first, and the minority shareholders are last in line.'

Mano Sabnani, chief executive of business advisory Rafflesia Holdings and a minority shareholder of several firms, believes that the SGX should not be so quick to delist these troubled companies if the safeguards it has in place for minority shareholders cannot be put into practice. 'If that is the case, and I can understand why companies cannot give an offer, why rush to delist the companies? They can be suspended, and some of them may be able to afford to continue paying listing fees. 'Allowing them to stay listed a while longer means that there is a chance they can be revived. An RTO (reverse takeover) offer may come along the way, or a new investor may want to come in to take the company forward.'

The SGX can also consider beefing up its current rules by getting a company on its watch-list to regularly remind shareholders that it may get delisted, said Drew & Napier's director of corporate & finance Marcus Chow. 'As many of the investors who are stranded may be 'mom and pop' investors who may not be too savvy, perhaps rules can be enhanced to ensure watch-list companies step up mailed, written communication to its shareholders on a regular basis, informing them of the company's status once the company is on a watch-list,' said Mr Chow.

'Such regular communication allows the retail shareholders to take calculated positions from time to time. Ample time and communication prior to a suspension of a counter will allow retail investors to trade out their shares, and I am assuming here there will be buyers,' said Mr Chow.

[ACTIVIST SPEAKS]

COMPACT METAL INDUSTRIES LTD

The board of directors (the “Board”) of the Company refers to the announcements dated 2 March 2017, 3 March 2017 and 6 March 2017 in relation to the above-mentioned matters (the “Announcements”).
The Board wishes to inform shareholders of the Company that the Company has lodged two Notices of Appeal with SGX-ST today pursuant to Rule 1419 of the Listing Manual in relation to the above-mentioned matters.
The Company will continue to update shareholders on any further developments.

BY ORDER OF THE BOARD COMPACT METAL INDUSTRIES LTD
Zhang Zengtao Managing Director
21 March 2017

早知如此 何必当初

[sgmystique]

It is going to be quiet a suspenseful last few days of March!

However, considering that Compact has been holding steady at $0.016 since the news that trading would be suspended from the 3rd April gives me hope that perhaps SGX might relent and allow Compact an extension. The other counter in a similar state, Cacola only has sellers and practically no buyers for its shares at the minimum price of $0.001!

[ACTIVIST SPEAKS]

Till now, it appears the only positive equity company that SGX allowed to involuntarily delist without an exit offer was General Magnetics. That put minority shareholders (and also SGX?) in a fix until today.

On 6 Mar 17, a clarification notice was posted on SGXnet to correct the fact that the company shares will be suspended on 3 Apr 17 and not DELISTED on 3 Apr 17. Maybe this time, SGX will not allow Compact Metal to do what General Magnetics did in 2010. SGX has not fixed the delisting date yet.

[sgmystique]

Compact Metal is now trading at $0.029. That is a far way from the $0.012 it had plunged to on the 6th March 2017 when there were fears that trading in Compact Metal would be suspended!

In the same time those who had invested in Cacola saw their entire net worth extinguished. Both the scrips were due to be suspended from trading due to posting losses for 3 successive years.

I lost in Cacola and am making some money in Compact. Just goes to show that diversification might reduce overall returns but it helps one stay in the game 

[sgmystique]

Compact Metal is now trading at $0.029. That is a far way from the $0.012 it had plunged to on the 6th March 2017 when there were fears that trading in Compact Metal would be suspended!

In the same time those who had invested in Cacola saw their entire net worth extinguished. Both the scrips were due to be suspended from trading due to posting losses for 3 successive years.

I lost in Cacola and am making some money in Compact. Just goes to show that diversification might reduce overall returns but it helps one stay in the game 

Somebody is willing to pay $0.036 per share of Compact Metal today. That is 3 times the $0.012 it traded at just 8 months back. Am wondering what are those compelling changes that have ocurred to increase the value of the business by 3 times in such a short period of time!!!

Would appreciate inputs from fellow Valuebuddies....

[BlueKelah]

Compact Metal is now trading at $0.029. That is a far way from the $0.012 it had plunged to on the 6th March 2017 when there were fears that trading in Compact Metal would be suspended!

In the same time those who had invested in Cacola saw their entire net worth extinguished. Both the scrips were due to be suspended from trading due to posting losses for 3 successive years.

I lost in Cacola and am making some money in Compact. Just goes to show that diversification might reduce overall returns but it helps one stay in the game 

Somebody is willing to pay $0.036 per share of Compact Metal today. That is 3 times the $0.012 it traded at just 8 months back. Am wondering what are those compelling changes that have ocurred to increase the value of the business by 3 times in such a short period of time!!!

Would appreciate inputs from fellow Valuebuddies....

fat finger trade lah, happens a lot in small caps.

as I mention before this is high risk and suspicious company. but high risk means possibility of high return, or total wipeout as you found out. 

caveat emptor.

[ACTIVIST SPEAKS]

Compact Metal is now trading at $0.029. That is a far way from the $0.012 it had plunged to on the 6th March 2017 when there were fears that trading in Compact Metal would be suspended!

In the same time those who had invested in Cacola saw their entire net worth extinguished. Both the scrips were due to be suspended from trading due to posting losses for 3 successive years.

I lost in Cacola and am making some money in Compact. Just goes to show that diversification might reduce overall returns but it helps one stay in the game 

Somebody is willing to pay $0.036 per share of Compact Metal today. That is 3 times the $0.012 it traded at just 8 months back. Am wondering what are those compelling changes that have ocurred to increase the value of the business by 3 times in such a short period of time!!!

Would appreciate inputs from fellow Valuebuddies....

Then.... Compact Metal was facing forced delisting by SGX.  Even the date of suspension was specified.  Broking houses immediately valued the collateralized value of the shares as zero.  I am sure you can remember the forced selling done that few days where a block of shares were dumped to as low as $0.012.  The price stayed at 0.015 for a period.

Now.....No more threats of delisting.  A new animal with a cement plant in the path of the OBOR, financed wholly by new shares.  Blue sky scenario will probably propel the shares higher.

[sgmystique]

Thanks ACTIVIST SPEAKS.... BTW what is a blue sky scenario 🤔