Double whammy for Healthbank Holdings – trade-with-caution alert, compliance notice

BOURSE regulator Singapore Exchange Regulation (SGX RegCo) on Friday (Feb 24) issued a “trade-with-caution” alert on Catalist-listed Healthbank Holdings , urging investors – both current and potential – to exercise caution when dealing in the counter’s shares. 

SGX RegCo noted that from Aug 22, 2022 to Nov 1, 2022, a total of about 4.4 million Healthbank shares were traded. In the two months before this period, none were.

SGX RegCo had found out in its review that during the period, trades by “a small group of market participants” had accounted for almost 80 per cent of the total volume traded.

On Nov 4, Healthbank had announced that it had entered into an agreement with New Energy Industry Sweden to acquire all the shares of New Energy International Investment Holdings, which was incorporated in October last year. 

Healthbank had also announced a proposed acquisition on Nov 4. The company went on to obtain its shareholders’ approval at an extraordinary general meeting on Dec 30 last year, as it had classified this as a major transaction.  

The bourse regulator also noted that, from Oct 25 to Nov 1 last year, the counter’s share price had risen by 75 per cent or S$0.09 to close at S$0.21 from S$0.12.

SGX RegCo said it is reviewing the trades of Healthbank’s shares, and will take the “necessary actions” – which includes referring the case to statutory authorities if necessary, and subjecting the proposed acquisition to further review. 

Shortly after issuing the trade-with-caution alert on Friday, the bourse regulator released a notice of compliance, directing the company to classify the proposed acquisition as “a very substantial acquisition” or a reverse takeover. 

SGX RegCo pointed out that Healthbank had computed the aggregate value of the purchase consideration compared to its own market capitalisation as at Nov 1 last year – within the period when unusual trading was observed. The proposed acquisition had been classified as a major transaction as the ratio had stood at 91.7 per cent. 

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However, if the company had used its market capitalisation prior to Oct 25 – before the period of unusual trading activity – the ratio would have exceeded 100 per cent, as the company’s market capitalisation stood at about S$10 million. 

A company undergoing such a transaction – either a very substantial acquisition or a reverse takeover – is required to appoint a full sponsor, submit a pre-admission notification, and draft a shareholders’ circular to the Singapore Exchange for review and approval, among other things, said SGX RegCo.

The bourse regulator also said that the Singapore Exchange had neither examined nor approved the circular. It has also asked the company to obtain “fresh approval” from shareholders for the proposed acquisition and all related transactions. 

Shares of Healthbank ended Friday unchanged at S$0.144.