SGX RegCo urges caution in trading of Kitchen Culture shares

SINGAPORE Exchange Regulation (SGX RegCo) on Monday evening warned shareholders and potential investors to exercise caution when dealing in the shares of Catalist-listed kitchen solutions provider Kitchen Culture Holdings. 

SGX RegCo's review of the trades in the company's shares showed that a group of accounts appeared to be influencing the share prices. 

The individuals behind these accounts are likely connected to the traders highlighted in the bourse regulator's previous trade-with-caution notice issued on Sept 24, 2019, SGX RegCo said.

On Monday, the counter tumbled 31.6 per cent or 6.8 Singapore cents to close at 14.7 cents, with some 29.3 million shares changing hands over the course of the day.

SGX RegCo observed the share price of the kitchen solutions provider had "climbed steadily" from 6.9 cents on April 15, 2020 to 32 cents on Aug 11, 2020, denoting a surge of 25.1 cents or 364 per cent. In contrast, the benchmark Straits Times Index declined by about 2.4 per cent during the same period.

The regulator also noted two key corporate actions by the company where the volume weighted average price (VWAP) of its shares had been "crucial" to the transactions at hand.

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One of these corporate actions was announced on April 29 this year, when Kitchen Culture said it had entered into a non-binding term sheet with investors for the latter to grant a S$6.05 million interest-bearing convertible loan to the company. The maximum conversion would be about 46.7 million new ordinary shares, and the conversion price of 14.9 cents apiece was at a 5.3 per cent premium compared to the VWAP of 14.15 cents on April 24 that was used as a reference in the announcement.

On July 22, the company also proposed a placement of about 40.6 million new ordinary shares at an issue price of 23.5 cents each, denoting a 9.6 per cent discount to the reference VWAP of 26 cents on July 17.

SGX RegCo said it had observed "substantial price movements" in the counter prior to these two announcements. 

It added that it is reviewing the trades in Kitchen Culture shares, and will take necessary actions, including referring the case to statutory authorities where warranted. 

The latest trade-with-caution alert comes after SGX RegCo had queried the company on June 4 regarding the "unusual price movements" in its shares. It had asked whether Kitchen Culture was aware of any possible reasons for the trading activity.

In its reply, Kitchen Culture cited its March 31 announcement which stated that the company was preparing to seek shareholders' approval for a proposed diversification of the group's core business to include the trading of medical and related supplies, as well as artificial intelligence, machine learning and data science.

The company also said then that it had been exploring business collaboration and ventures, as well as new businesses opportunities with a view to "assess the feasibility of new areas of opportunities and alternate businesses".

Separately, last Thursday, shares of Kitchen Culture sank after it said it was looking to acquire a 30 per cent interest in Big Data credit management firm Ooway Technology. The proposed issue price of the consideration shares to fund the stake purchase was 26.58 cents, which is at a 17.3 per cent discount to the VWAP of 32.12 cents on Aug 11.