SGX calls out Abterra executives for breaking listing rules

They delayed vital company announcements.

Singapore Exchange (SGX) stated in a public reprimand that based on its assessment of the report by PricewaterhouseCoopers CM Services, and on responses given on behalf of Abterra, Executive Chairman and Executive Director Cai Sui Xin, and CEO and Executive Director Lau Yu, SGX believes that the offending parties have breached several SGX listing rules.

According to the reprimand, the first breach was that Cai and Lau failed to act in the interest of shareholders in the 22.8% interest acquisition in Zuoquan Xinrui Metallurgy Mine (Xinrui) by not securing the Xinrui interest for the lowest possible price stipulated under the sale and purchase agreement (SPA).

Also, the market regulator said that Cai and Lau failed to cancel the call options when they were unlikely to have been exercised and replaced the call options with cash payment which resulted in Abterra paying an additional RMB70.5m and/or agreeing to a security deposit removal amendment.

SGX also stated that under Cai and Lau’s management, Abterra deferred the announcement of a reduction of Abterra’s indirect shareholding in Shanxi Taixing Jiaozhong Coal Industry (Jiaozhong) from 49% to 24%. The bourse reported that the announcement was delayed by more than three months.

Lastly, SGX said that Abterra also failed to immediately announce material changes in the Xinrui SPA. The changes involved the deed, the change of the profit guarantee date, and the removal of the security deposit.

According to SGX, the late or non-disclosure of the reduced shares and the SPA amendments would likely have caused the establishment of a false market for Abterra.

“In view of the Listing Rule breaches, SGX has directed Abterra to appoint a compliance adviser to advise Abterra on its continuing listing obligations,” stated SGX.

The bourse advised SGX-listed companies to consult SGX before they appoint Cai or Lau as a management director or member, and concluded the reprimand by saying that the case has been referred the case to the relevant authorities.