Share manipulation scheme unveiled? Ex-staffer behind selling of Civmec shares?

Ex-staffer behind selling of Civmec shares?

Melissa Tan

19 March 2015

Business Times Singapore

THE sharp drop in shares of Australian engineering services firm Civmec this week is said to be possibly due to selling by a former employee. The counter dived 29 per cent or 14.5 cents to end at 35.5 cents on Wednesday after the bourse warned in the morning that investors trading in Civmec should be cautious. This tumble followed a 16 per cent slide in the share price from 58 cents last Friday to 50 cents on Tuesday. Trading volumes have also spiked over the past two days. The number of shares changing hands jumped from slightly more than 300,000 on Monday to 1.9 million on Tuesday and then 4.9 million on Wednesday, which was the highest daily level since September 2013 according to Bloomberg data.Civmec executive chairman James Fitzgerald said in a filing on Wednesday that the company knew of a “motivated” seller who has been selling down his large but not substantial stake for personal reasons, which in turn may have led to heightened trading in the stock. He declined to name the seller.

He said that Civmec is still expanding its Australian operations into the public infrastructure segment and aims to grow its footprint in Australia’s east coast and South-east Asia. Civmec also does construction and engineering work for the mining sector and the oil and gas industry.

Chief executive officer Patrick Tallon said in a phone interview that this possible seller had been a founding employee at Civmec and owned a stake of slightly under 5 per cent when the company went public. The man, who was not an executive or a manager, later left the firm around October last year on “amicable” terms and was not “disgruntled”, he added.

Mr Tallon said that Civmec had received reports that the man had sold some shares last week and the week before, though the company does not know how many shares were sold. He reckoned that this former employee may have owned around 17 million shares at the start of March, which works out to around 3 per cent of the 501 million shares outstanding.

The bourse had queried Civmec on Tuesday about unusual trading activity, to which Civmec replied that it did not know of any information about its business that might explain the stock plunge.

Mr Tallon added on Wednesday that Civmec’s business has been “perfectly fine” and its projects are on track. He also said that the firm plans to focus equally on its mining segment, oil and gas projects and infrastructure business.

The company debuted on the SGX mainboard in April 2012 and its initial public offering raised about S$40.4 million at an offer price of 40 cents per share. The stock rose as high as S$1.25 in January 2013 but fell later that year amid a commodities slump.


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