SINGAPORE - Shares of Raffles Education Corporation (REC) were halted from trading on Tuesday morning (Oct 19), following a 26 per cent dive on Monday in the wake of a widely circulated letter by tycoon Oei Hong Leong questioning alleged corporate governance issues at the company.
REC called for the trading halt, pending an announcement, in a filing with the Singapore Exchange (SGX) before the stock market opened.
On Monday, the mainboard-listed stock tumbled 2.1 cents or 25.6 per cent to 6.1 cents - its lowest ever.
Trading volume was relatively heavy, with some 52.34 million shares changing hands.
In his letter, Mr Oei asked about varying amounts of cash the company paid to the wife, sons and daughter-in-law of REC chairman and chief executive Chew Hua Seng.
But REC dismissed the questions, saying it viewed Mr Oei's letter as containing "bare allegations and material inaccuracies which are not substantiated", in a response on Monday night to SGX queries on its trading activity.
It also said the company is taking legal advice and intends to respond to the letter in due course.
Mr Oei has been in a bitter feud with Mr Chew over the latter's alleged reneging on a deal to buy back the former's shares at 44 cents more than two years ago. Mr Oei subsequently sued Mr Chew to enforce the alleged deal, but lost.
In an exchange filing on Tuesday evening, it was disclosed that Mr Oei had on Monday sold 38.93 million of his shares in REC for $2.7 million. This works out to an average price of 6.9 cents per share. The sale reduces his stake to 7.34 per cent, from 10.16 per cent previously.
Meanwhile, various REC independent directors have been buying shares in the company.
Independent director Ng Kwan Meng bought 1.5 million REC shares at 7.8 cents on Monday.
Lead independent director Lim How Teck has purchased two million REC shares over the past two weeks. On Oct 6, he bought one million at 9.6 cents. His latest purchase of one million shares, which doubled his stake, was on Oct 12 at 8.8 cents.
Also now weighing in on the saga is Associate Professor Mak Yuen Teen, who teaches corporate governance at the National University of Singapore Business School. He followed up on Mr Oei's letter and questioned REC's corporate governance and remuneration policies.
"REC has not been transparent about remuneration paid to individual directors and key management personnel over the years," said Prof Mak's letter, posted on a website called "Save Raffles Education".