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SIAS calls on regulator to look into OSIM dealings

SINGAPORE — The Securities Investors Association (Singapore), or SIAS, has appealed to takeover regulator Securities Industry Council (SIC) to investigate the trading fiasco in OSIM shares to see if a false market had been created and whether shareholders who suffered losses as a result should be compensated.

SINGAPORE — The Securities Investors Association (Singapore), or SIAS, has appealed to takeover regulator Securities Industry Council (SIC) to investigate the trading fiasco in OSIM shares to see if a false market had been created and whether shareholders who suffered losses as a result should be compensated.

On April 5, Mr Ron Sim, founder as well as chairman and CEO of lifestyle products distributor OSIM, raised his offer to buy over the remaining 31.7 per cent stake in the company that he did not already own to S$1.39 a share, inclusive of a 2-cent final dividend for the fiscal year 2015, from S$1.32 previously. But trading was abruptly halted minutes before the close of market, prompting widespread speculation over the reason behind the move. Despite having said his offer was final, Mr Sim on April 8 raised his offer by another 2 cents to S$1.41, including the 2-cent final dividend.

After the trading halt was lifted on Monday, it transpired that Mr Sim’s takeover vehicle Vision Three had bought shares by mistake from the market between S$1.38 and S$1.39 on April 5, higher than the ex-dividend S$1.37 offer price, according to a statement by Credit Suisse, which is managing the deal. It was because of this that Vision Three was ordered by the SIC to raise the offer price to no less than S$1.39 per share, or S$1.41 including the final dividend, in line with the Code on Takeovers and Mergers. The code seeks to ensure fair and equal treatment of all shareholders and SIC does not concern itself with the commercial merits of takeover and mergers.

“SIAS is very concerned that the announcement by Credit Suisse on behalf of Vision Three on April 5, 2016, which was at variance with the series of share purchases made on the offeror’s behalf on the same day, might have resulted in the creation of a false market for OSIM’s shares on that day,” said Mr David Gerald, SIAS president and CEO, in his letter to the SIC. “The offeror, by announcing on April 5, 2016, that it had revised the final offer price to S$1.39 cum dividend and S$1.37 ex-dividend may have led to shareholders selling their shares at prices below S$1.39 on April 5, 2016.”

Credit Suisse had acquired nearly 17 million shares from S$1.38 to S$1.39 on April 5 — about 2.28 per cent of OSIM’s total 741.59 million shares. The share purchases were a significant block that could tip the balance in favour of the plan to privatise the company, said Mr Gerald, as he called for the SIC to determine whether the shareholders who had suffered trading losses that day should be properly compensated with reference to the takeover code that seeks to ensure all shareholders are treated equally.

Mr Mano Sabnani, who heads corporate advisory firm Rafflesia Holdings and is a shareholder of OSIM, said: “The takeover is in a mess. OSIM shareholders who lost out due to mistakes in the process of executing the buyout and sold at S$1.38 and S$1.37 on April 5 should be compensated up to S$1.39. Alternatively, all the transactions on April 5 should be declared null and void and shares returned to all who sold.”

Mr Sabnani said the shares bought in error could potentially make the difference as to whether the privatisation plan succeeds. Urging SIC to take action, he said: “The shares purchased violated the takeover code.” Mr Sim has so far managed to garner a total of 74.28 per cent of OSIM in his bid to take the company private.

OSIM and Credit Suisse declined to comment when contacted by TODAY yesterday.

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