Innopac Holdings Ltd - Why did Nomura dump shares shortly after acquiring more?

Nomura International claims to have sold shares at 10 cents each on October 9. But this cannot be the case. Innopac's stock last traded at that price on the day of sell-off, October 4.

16/10/2013 – Nomura International Plc appears to have dumped shares in Innopac Holdings Ltd on the day the stock lost more than half its value, even though it became a substantial shareholder just days earlier.

Innopac was one of the stocks to be queried by the SGX on October 4 (Friday).

The exchange asked the company to clarify the sudden fall in its stock price in the first hour of trade on that day.

In reply, Innopac's board of directors said they were not aware of the reasons for the fall in the stock price.

While three other stocks - Asiasons, Blumont, LionGold - were suspended from trade, the exchange didn't impose such a restriction on Innopac, and the stock closed at 6.5 cents that day, down 53%.

Interestingly, a day before the sell-off, Nomura International Plc emerged as a substantial shareholder in Innopac.

According to an announcement on October 3, Nomura International Plc had a 5.07% stake in Innopac.

But in the wake of the sudden and sharp fall in Innopac's stock price, Nomura sold some of its shares in Innopac on October 9, which was disclosed in an announcement on October 10.

However some things just don't add up for us.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. Did Nomura get the date wrong?

According to the October 10 announcement, Nomura International Plc sold 73,513,000 shares in Innopac for S$7,351,300 on October 9.

That works out to be an average selling price of exactly 10 cents/share.

Nomura, in the announcement, clearly said the shares were sold 'via market transaction'.

Therefore, it wasn't an off-market deal.

But according to the trade data on NextView on October 9, Innopac's stock made a high of 5.4 cents and a low of 4.7 cents, to close the day at 5.3 cents.

In fact, the last time the company's stock was at 10 cents or higher was on October 4 – the day the stock lost 53%.

Therefore that makes us wonder how Nomura could sell the shares at 10 cents/shares on the market on October 9.

And that begs the next question:

Question

2. Did Nomura sell more than 73.5 mln shares on October 9?

We doubt it, because the price of 10 cents/share was last seen on October 4.

But there is another interesting thing about that day.

This is how Innopac's stock traded on October 4:

The stock price crashed from 14 cents to 9.1 cents within the first 40 minutes of trade on that day.

Therefore, Nomura could have sold 73,513,000 shares while the stock was plunging in those 40 minutes.

Therefore the next question:

(Total:7 questions)

We tried several ways to contact Nomura for clarification, but are yet to hear from them (which is why you are seeing this message).

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