In reply to yours truly questions on the secret MAS – AirAsia share swap during the Committee Stage of the Budget Debate on 2-11-2011, HERE, the Deputy Minister of Finance, YB Senator Datuk Awang Adek, told Parliament before noon today as follows:
That the decision by Khazanah to apply the formula for the said secret share swap based on the closing MAS and AirAsia Bhd share price on 5-8-2011 (prior to the suspension) was correct;
That the Securities Commission and Bursa KL has commenced their investigations into the allegations of insider trading of MAS and AirAsia Bhd counters and the non-announcement of the impending secret MAS – AirAsia share swap to Bursa KL prior to 9-10-2011 where the said secret share swap was inked between Tan Sri Azman Mokhtar and Tan Sri Tony Fernandes;
That at this stage the Securities Commission and Bursa KL will not invite MACC to join in the investigations into the allegations of insider trading and for not making the necessary announcement to Bursa KL prior to the inking of the said secret share swap agreement.
It was most shocking to learn that the formula for the said secret share swap was not based on Net Tangible Assets, which should have been used in this case because MAS is an asset back corporation and Airasia Bhd is not.
It must be noted that under Disclosure Guide Bursa KL Rule 9.03 (2) states:
“An information is considered material if it is reasonably expected to have a material effect on the:
a. price, value or market activity of its securities; or
b. investors decision in determining his choice of action.”
The Disclosure Guide Bursa KL Rule 1.11 provides: In making the assessment of whether an event or information is material for the purpose of announcement, it is important for the listed issuer to take into account relevant factors such as the following:
a. the anticipated impact of the information on the listed issuers’s entire scope of activities; or
b. the anticipated impact of the information on the listed issuer’s financial position or performance; or
c. the relevance of the information on the factors that determine the price of the listed securities.”
The counters of both MAS and AirAsia Bhd share were suspended on 8-8-2011 pending announcement with no detail at all. On 9-8-2011 the said secret share swap agreement was signed.
From the website of Bursa KL, prior to 9-8-2011 there was no announcement of whatsoever nature Bursa KL pertaining to the said secret MAS- AirAsia share swap.
However, on 6-8-2011 the MalaysianInsider, a new portal, broke the news of the secret share swap with clinical accuracy on the details of the said secret share swap.
On 6-8-2011 the Star published about the said secret share swap based on sources.
“Published: Saturday August 6, 2011 MYT 9:36:00 PM Star
Updated: Saturday August 6, 2011 MYT 9:37:03 PM
MAS, Air Asia in share-swap deal
KUALA LUMPUR: Malaysia Airlines and AirAsia will swap shares in a deal which will see Tan Sri Tony Fernandes become the single biggest shareholder.
Sources said the deal, struck last week after negotiations over the past year, became urgent after MAS’ poor showing in the last two quarters.
Fernandes is set to get 20% of MAS equity under the deal that is to be signed next week, with some sources saying it had already received the Government’s approval and could be inked by Monday.
Industry players expressed surprise at the deal because of past animosity between the management of the two airlines.
Those who were aware of the negotiations were also surprised at the speed at which it was concluded.”
Yours truly leaves it to you to judge whether the above facts were material enough to “Cause the anticipated impact” on the MAS and AirAsia entire scope of their activities, financial position and performance and determine the price of the MAS and AirAsia share price. Last week the KL Session Court, Dauk Jagjit Singh has found the two ex-directors of Transmile Bhd for filing false information with Bursa KL and both of them were sentenced to one year jail and RM300,000 fine. How about not making any announcement at all? The sentence should be more severe! Read HERE.