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Hyflux director divested all his shares!

Sunday, April 17, 2011

Lee Joo Hai, a director of Hyflux, divested his shares completely at $2.18 per share in open market sale at own discretion on 15 April 2011. Total: 375,000 shares. As an insider, could he know something that we retail investors don't? Probably.

In my last blog post on the subject, I had mentioned that "the news that Hyflux is issuing preference shares with an annual dividend rate of 6% is somewhat surprising to me. In an environment of low interest rates, isn't paying a 6% interest a bit expensive? It would only make sense to do this if borrowing from a financial institution would be costlier and it would only be costlier if the company and/or its business is perceived to be high risk."

Judging by how well the response is to the placement shares, which were 7x oversubscribed, I expect the ATMs to see long queues as people try to get their hands on some of these preference shares. Application closes on 20 April and the shares will start trading on 26 April. Good luck to those interested.

Related post:
Hyflux: 6% perpetual Class A preference shares.

16 comments:

Temperament said...

Hi AK71,
Long time no see. How are you?
Just for laugh:
Have you checked the director's activity lately? I heard rumour he has made a few millions @ our 2 money-printing companies.
Why does he still has to get rid of all his Hyflux shares in a hurry? I rather think he made his millions @ our casino(SGX EX-for some it is our real casino). Ha! Ha!
Cheers.

AK71 said...

Hi Temperament,

Good to hear from you again. If he made so much money already, why is he ridding himself of his shares in Hyflux? Hmmm... We can only guess. ;)

Hubert wee said...

Full insider divestment is rarely a good thing....

AK71 said...

Hi Hubert,

I am inclined to agree with you....

Paul said...

Personally I wonder if we are reading too much into the insider action.

Whatever happens to the saying 'many reasons for an insider to sell but only one for an insider to buy'. Of cos we often hear this when a positive spin is created for the company in question.

In much the same way, it seems like a lot of people is now trying to attach a negative spin on the action of a director cashing out.

Neither of it makes much sense to me either way. So IMO, an insider cashing out as the company is issuing preference shares are probably independent and unrelated events.

Perhaps SGX should compel directors and substantial shareholders to furbish reasons for their insider trades. Haha but I fear that may be too intrusive.

AK71 said...

Hi Paul,

You have made a most objective point. The two events of a director cashing out totally and the timing of the preference shares offer could be completely unrelated, of course. It could be purely coincidental that they took place at about the same time. :)

Isaac said...

Maybe he needs the money to send his kids to the UK...

AK71 said...

Hi Isaac,

I guess your surname is "Lee"? ;p

Nick said...

Oh no I have shares in Hyflux :X
They are up 5% now. Hope it doesn't crash.

AK71 said...

Hi Nick,

I doubt there would be a crash but who are we to second guess Mr. Market's behaviour? ;)

la papillion said...

Hi AK,

Hmm, divested all his shares? I do not know what to make of this, and I usually don't interpret it, unless it's the CFO quitting or something like that.

Thanks for highlighting it :)

Ruttger said...

Hi

How do you know that it is 7 times oversubscribed?

AK71 said...

Hi LP,

No need to analyse it too since I am not interested in the preference shares. ;p

AK71 said...

Hi Ruttger,

Hyflux Ltd (the “Company”) wishes to announce that under the Reserve Offer and Placement, under which the maximum aggregate liquidation preference of the Class A Cumulative Preference Shares offered amounted to S$200,000,000 (the “Maximum mount”),applications and indications of interest were
received for approximately seven times the Maximum Amount. Due to the overwhelming response, the Company has stopped taking in applications under the Reserve Offer and Placement.

Anonymous said...

I skip this.

TN.

AK71 said...

Hi TN,

I gave the preference shares a miss too but I am sure they won't miss me. ;p

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