By CHEW XIANG
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MARKETS have grown infinitely more sophisticated ever since an English company went public in 1720, claiming it was 'carrying out an undertaking of great advantage, but nobody is to know what it is'.
In the case of Jade Technologies, the house of cards took a full year to crumble. Last January, investor and businessman Anthony Soh announced multi-billion-dollar projects for the two tiny Catalist companies he controlled then: Jade and E3 Holdings.
He was going to plough billions of yuan into developing land in China, mine over $1 billion worth of coal from West Sumatra, invest in an oil refinery, flip property in Malaysia for an instant $9 million profit, and even trade Russian diesel on the side.
Not much is known about Dr Soh's antecedents. In person, he seems competent and quietly charismatic, yet few could have known if he had the ability to execute projects of such diverse challenges. Still, many investors - both small retail punters, and big sophisticated institutions - piled into his companies anyway.
Jade traded at over 50 cents less than 18 months ago and even then seemed undervalued - CIMB said in March the company could have been worth over $1 a share, based on a report by Jones Lang LaSalle Salmans that valued its coal mine asset at that astronomical figure.
In interviews with BT a year ago, Dr Soh paid tribute to those who believed in him then: 'I'm grateful to many of the small household investors . . . they don't know what business we are in, they don't know what it stands for, but they have so much faith.'
On Monday, Jade, now under new management, said it was abandoning the West Sumatra coal mine. A geologic study said the mine didn't hold 40 million tonnes of high-quality coking coal, as anticipated. Instead, it had less than one million tonnes of poor-quality stuff, contaminated with enough sulphur and ash to make it 'unattractive to buyers', Jade said.
The mine is the last of Jade's mega projects to topple; it was also the most promising. Others have been progressively abandoned as the company, left floundering after Dr Soh's takeover bid last March collapsed, scrambled to unwind contracts and cancel deals to save cash for the coal mine.
The company has already sunk at least $4 million into licences, permits and infrastructure costs into what is now a fruitless mine. It faces a tough rebuilding and refinancing challenge to make something of a new coal mine in Riau that it is hoping to exploit. Last September, it had just $4.67 million left in the kitty, after a share placement in May netted over $9.6 million.
Meanwhile, E3 is still trying to back out of the oil refinery investment in China - a foreign saviour was said to be on the cards two months ago, but nothing has been heard since. The company is facing legal squabbles after it was locked out of its offices by its landlord; its own auditors refused to give an opinion on its accounts and some $22 million of shareholders' money has decamped to China.
Two conclusions are possible from the whole episode. The first, more innocent explanation, is that E3 and Jade are just two more victims of the vicious economic climate.
In other words, they had honest, possibly profitable, projects, but were undone by bad luck, bad timing, and the departure of Dr Soh's guiding hand from the scene. (He has quit the companies to focus on his legal problems - the police are investigating the circumstances of the botched takeover while OCBC Bank, financial advisers on the deal, are suing him for misleading them into acting for him.)
The second explanation adds Jade and E3 to the sorry list of penny stocks which announced phenomenal deals, sometimes with profit guarantees, that were subsequently called off or delayed: Rowsley, Oculus and Hosen Group. In many cases, what had seemed great bargains turned out duds, and their share prices collapsed in consequence.
Still, it's not all bad - or, at least, not bad for all. Journalists, for one, get great copy, while advisers, brokers, dealers and traders made money too, no doubt. And not all investors were left without chairs when the piper stopped playing. Some would have gotten out in time; and for those that didn't, there's always another chance when the next game begins.
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