- POSTED: 08 Oct 2013 23:21
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The downward spiral in shares of Blumont Group got a reprieve on Tuesday after the company named a new chairman who wants to turn things around.
SINGAPORE: The downward spiral in shares of Blumont Group got a reprieve on Tuesday after the company named a new chairman who wants to turn things around.
Blumont Group's shares rebounded smartly in early morning trade. The shares more than doubled to hit an intra-day high of 30 cents.
The momentum didn't last though. The counter closed flat on Tuesday at 13 cents.
The chairman-designate of the beleaguered Blumont Group is Hong Kong-based mining entrepreneur Alexander Molyneux.
He is also the chairman of two resources firms that Blumont is invested in.
At a press briefing on Tuesday, Mr Molyneux said he moved in to acquire a 5.2 per cent stake after seeing Blumont's share price fall by over 50 per cent last week.
Under the deal, he will pay 40 cents per share, but this could go up to 60 cents depending on the stock’s trading.
"This stock is trading at 20 cents, or was when we walked into the room. I'm happy to pay 60 cents, and I think I can still make a lot of money here. I'm going to be locked up for two years at 60 cents," said Mr Molyneux.
He added: "I'm going to help the company shape its business plan going forward. The strategy is not going to change. We are on our way to becoming Asia's BHP (Billiton). Blumont has established an asset suite that is globally diversified and has commodity diversification."
On the same day, Blumont also announced that it will extend loan facility of up to US$8 million to ASX-listed coking coal producer Cokal Limited.
In July, Blumont said it had entered into a conditional agreement to acquire a 12.75 per cent stake in the enlarged issued share capital of Cokal.
Still, some analysts are unconvinced.
Gabriel Yap, executive chairman of GCP Global, said: "Investors are actually being prodded along to look at the company Blumont as a great value aggregator of other companies, when actually all these companies that they are proposing to buy, have not even had an earnings impact."
After announcing a string of proposed acquisitions, Blumont's shares rose nearly 10 times over the year to trade at around S$2.35 in September.
This prompted queries from the Singapore Exchange (SGX) and a trading suspension on October 4.
The firm's shares then plunged 85 per cent on October 7 after the trading halt was lifted.
Blumont claims it does not know what caused the volatile share price movements in the past few days.
The firm added it does not want to comment on the trading restriction.
Blumont, along with Liongold and Asiasons, were named "designated securities" by the SGX.
This means investors cannot short these stocks and purchases must be paid for upfront with cash.
The three firms have also been identified as belonging to a group of penny stocks that are linked through a web of cross-holdings.