Monday, June 01, 2020

Could Have Done Better

BOUSTEAD/LTAT - As the main shareholder, LTAT should be careful about what it says in public. LTAT said it was considering a proposal to privatise the company, subject to finalisation of structure, funding and regulatory approvals. IF all major shareholders CAN do this at will, it will cause chaos in the said stocks. Just by saying "considering", one can "push" one's stock without retribution. 

This forced Boustead to come out with another statement that this does not indicate a firm proposal, nor does it indicate LTAT will definitely go through with proposal. Just got to wary here, non-censure or no-reprimand will mean it is OK for major shareholders to say certain things before fruition. It is so easy to NOT go ahead with the said proposal,... no funding la, cannot agree on proper structure.

SC and Bursa have to be careful NOT to set a precedent here. You cannot reprimand one and not the other. 

There has to be line drawn between revealing substantive information of relevance and "not time yet to reveal till most critical details have firmed up". Not tackling this may give rise to unnecessary speculation and a volatile price movement which can only benefit the ones "in the know". What was most unnecessary was to put out an actual price of 80 sen as a possible offer. Why was that even necessary?

Maybe no one benefitted from this, and LTAT acted in the best interest of shareholders. Still, it leaves a sour taste and certainly not the best example of releasing proper important information to the investing public.

The shares of Boustead never did even reach 80 sen after the news. But there was heavy volume traded. What was more significant was the huge jump in volume on 22 May and 27 May, from 48 sen to 61.5 sen prior to the news flow. 


Jonathan keung said...

LTAT hands are tied. If they don't privatise Boustead they need to book thier losses { assuming their price mark of Bstead at end Dec 2019 is 1.00 +. A loss of may be 300+million for 2020. A barrier to declare any dividend for all the members. Bstead is LTAT is their biggest investment holdings.

SalvadorDali said...

Their hands are not tied. I have no problem about LTAT taking Boustead private. I have an issue as to why you would make such an announcement plus an indicative price when there has been no firm funding or structure. It gives rise to unnecessary speculation. Announce when you have a firm offer on the table, otherwise its just bs.

Jonathan keung said...

Yup. One reason why Bstead is not moving { until more news or clarity is announced } e. g. their funding. Unless LTAT have map out thier stragety { coming 3-4 months} to take it private { ie. before end December} for them not to book thier losses { mark to market valuations} Just my personal view

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