THE fallout of the Opes Prime collapse knows no bounds. Lawyers, gangsters, chief executives and mum and dad investors have all fallen victim to the sullied stockbroking firm.
In Singapore, Opes Prime's collapse has even scuppered the planned takeover of listed microchip manufacturer Jade Technologies Holdings.
That failed takeover has sparked two investigations by Singapore market regulators, who want to know how 30% of Jade's shares ended up in an Opes Prime account and ownership passed to Australian banks with no disclosure being made to the market.
Dow Jones in Singapore has reported that hedge funds
and six major investors lost hundreds of millions of dollars between them after Merrill Lynch dumped 256.84 million Jade shares, or a 26.5% stake in the company, that it seized after Opes Prime's collapse.
The shares were owned by Jade president Dr Anthony Soh, who was in the midst of making a takeover bid for the company.
Back in February Soh's takeover of Jade seemed a fait accompli. The adviser on the deal was Oversea-Chinese Banking Corp, formed out of the ashes of three Asian banks during the Great Depression of 1932. OCBC stated that Soh had the funding to support his takeover offer.
Before making his bid for Jade, Soh held 46% of the company. He offered S22.5¢ a share in cash for the rest, valuing Jade at $S218 million ($A171 million).
It was a simple deal - if Soh increased his stake to 50%, he would have to pay the S22.5¢ a share to all who accepted. With Jade trading at S22¢ a share in March, it seemed like easy money for hedge funds and investors. They planned to arbitrage the deal, and pick up the S0.5¢-a-share difference in a matter of weeks.
Omni Partners bought 49 million Jade shares at S22¢ in early March, with the intention of selling them to Soh for S22.5¢. Six other private investors held more than 30 million Jade shares between them, or 3% of the company, with a similar intention.
None of those investors knew that most of Soh's shares were held in an Opes Prime margin loan account - and that he was using the money to help finance his takeover bid.
In total, Soh had pledged 295 million Jade shares, or 30.5% of the company, as collateral to Opes Prime. That fact was not disclosed to the market until April 5, eight days after Soh's Opes Prime account shares had been seized by Merrill Lynch and resold on Singapore's Catalist exchange.
Merrill sold 95 million Jade shares at S22¢ apiece on the morning of April 1, mostly to investors and hedge funds keen to arbitrage the Jade takeover deal. Later that day Jade finally went into a trading halt.
Merrill had notified the Singapore exchange and Jade of its holding on March 31 - two trading days after it had acquired the stock, as required under Singapore law. But the exchange doesn't make such disclosures public until the company also confirms the transaction - something Jade didn't do until April 5.
By then Soh's holding in Jade had plunged to less than 15% and his takeover bid was in ruins. When Jade returned to the boards on April 7, its share price was wiped out in the first minute of trading - down from S22¢ to S7¢. In less than
60 seconds of trading, Jade had lost $S145 million in market capitalisation.
As a result of the failed disclosure of the Opes Prime margin loan, OCBC withdrew from its advisory role. The bank has since filed a complaint with the Commercial Affairs Department against Soh. Continued…
