Ezra Holdings investors are up in arms after the company revealed on Friday afternoon that CEO Lionel Lee had offloaded over 11 million shares in the company on January 12, just two days before the company announced a quarterly net loss of $53.7m.
Lee’s 100%-owned company Jit Sun Investments netted $913,341 from the sale. The stake was sold at an average share price of 7.9 cents, while shares closed the week at 7.2 cents, down almost 10% on the back of the negative set of quarterly results.
The sale has observers questioning whether the transaction could fall foul of The Companies Act and the rules of the Singapore Exchange (SGX), which states that a director cannot buy or sell securities of a company while in possession of information not in the public domain. Splash has contacted SGX for clarification.
Ezra Holdings appears to be walking a tightrope in the current environment of low oil prices. RHB Research, in a note last week, said that Ezra’s shares are now trading at 0.141x price to book value which indicates that the market expectation for the group is bankruptcy.
Ezra is going through major restucturing to avoid such a scenario.
It recently performed a rights issue and in August agreed to sell half of its subsea business EMAS AMC to Japanese firm Chiyoda Corporation. Chiyoda is paying $150m in cash and injecting $30m in additional capital into the company. Ezra is also working with its banks to restructure borrowings with a view to delaying principal repayments.
In early trading Monday, Ezra Holdings shares are trading down by around 5.5%.