Monday, 26 October 2009
Transcu shares plunge again as trading resumes
Shares in life sciences company Transcu Group took another plunge yesterday. The stock’s erratic price movements of late, which saw it jumping to over 20 cents apiece before it nosedived, has prompted market talk of whether the counter was a subject of speculative play or whether it was suffering from the impact of the conversion of $5 million worth of structured notes and the freshly concluded private share placement.
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Transcu shares plunge again as trading resumes
Stock dives 16.12% to end at 13 cents; some $120m wiped out from its market value over two days
By JAMIE LEE
23 October 2009
(SINGAPORE) Shares in life sciences company Transcu Group took another plunge yesterday. The stock’s erratic price movements of late, which saw it jumping to over 20 cents apiece before it nosedived, has prompted market talk of whether the counter was a subject of speculative play or whether it was suffering from the impact of the conversion of $5 million worth of structured notes and the freshly concluded private share placement.
The stock - which resumed trading yesterday - dived 16.12 per cent to end at 13 cents, or down 2.5 cents after an intra-day low of 12.5 cents. It was the second most actively traded stock with 118 million shares changing hands.
The share plunge followed a similar sell-down on Tuesday, mostly as talk of a trading restriction by UOB-Kay Hian - which began yesterday - pushed investors to dump the stock.
Over the two days, some $120 million has been wiped out from the stock’s market value. Its market cap is now at $266 million.
Singapore’s largest brokerage decided to restrict trading due to the high trading volumes and ‘rapid and inexplicable’ price jumps of the shares over the week, a source told BT.
During just four trading days last week, the stock gained 7.5 cents, or 62.5 per cent, to end at 19.5 cents on Friday. No trades were done on Monday last week. The average daily trading volume of the stock over the last 12 months was about 11 million shares.
This is nearly 10 times the average daily trading volume of the stock over the past four days, which stood at 100 million shares.
News of the trading curb by UOB-Kay Hian - which indicated that any investor who buys at least $30,000 worth of Transcu shares must now put down a deposit - continued to weigh on the stock, dealers noted.
But they added that the recent issue of new shares - both through the conversion of equity-linked notes worth $5 million by the subscriber Advanced Opportunities Fund and the $29.4 million share placement - at discounted prices could have put on more selling pressure. The fund - said to be based in the Cayman Islands and having mainly Asian investors - had converted a total of some 46.6 million new shares at discounted prices that ranged from 10.44 cents to 11.7 cents as at yesterday, regulatory filings showed.
The convertible notes issue - which was meant to raise up to $80 million - has since been terminated by Transcu, which was listed through a reverse takeover of cinema operator Eng Wah Organization last year. Some 320 million new shares had also been fully placed out to unidentified investors on Wednesday at 9.6 cents, representing a 38.1 per cent discount to last closing price of 15.5 cents on Tuesday.
Funds from the share placement would serve as ‘replacement financing’ in place of the terminated structured notes and the $10 million personal loan from chief executive Akihiko Matsumura, said Transcu on Wednesday. The erratic price movements of Transcu shares have not prompted any official query from Singapore Exchange.
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