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Heavy selling by former employee could be behind Civmec stock plunge
HEAVY selling by a former employee could have been behind the sharp drop in shares of heavy engineering firm Civmec this week, the company said in a Singapore Exchange (SGX) filing on Wednesday.
The counter dived 29 per cent or 14.5 cents on Wednesday to close at 35.5 cents on 4.9 million shares traded, after the SGX said in the morning that investors trading in Civmec should be cautious.
The price drop on Wednesday came after the stock fell to 50 cents on Tuesday from 58 cents last Friday. The number of shares traded had also jumped from slightly more than 300,000 on Monday to 1.9 million on Tuesday.
Civmec executive chairman James Fitzgerald said in the filing that the company was "aware that there is a motivated seller who holds a large but not substantial shareholding ... selling for personal reasons".
He added that Civmec is still expanding its Australian operations into the public infrastructure segment and is growing its footprint in South-east Asia.
Chief executive officer Patrick Tallon said in a phone interview that this possible seller had been a founding employee at Civmec and had a stake of slightly under 5 per cent when the company went public. The man later left the firm around October last year on "amicable" terms and was not "disgruntled", he added.
Mr Tallon estimated that this former employee likely had around 17 million shares at the start of March and added that Civmec had received reports that the man had sold some shares last week and the week before.
The SGX had queried the firm on Tuesday about unusual trading activity, to which Civmec had replied that it did not know of any information about its business that might explain the share price drop and spike in trading volume.
Civmec, which is based in Australia, provides construction and engineering services to the mining, oil and gas industry. It also recently diversified into doing engineering work for public infrastructure projects.
It listed on the SGX mainboard in 2012 with an initial public offering price of 40 cents per share.