Sea Star suspended, capital raising period extended
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The Cyprus Stock Exchange decided the suspension of trading of the titles of Sea Star Capital Plc from Wednesday, November 21, 2007 until Thursday, November 29, 2007 after the Company’s request and CySEC’s proposal in view of its intention to issue a Supplementary Prospectus, which will contain clarifications on the information included in the Prospectus dated 10/9/2007 and the Company’s activities.
The decision to issue a supplementary prospectus follows an intense campaign launched by Greek NEL Shipping Co. Chairman Apostolos Ventouris in demanding for additional information from the principle shareholder of Sea Star, Ioannis Vardinoyiannis and more clarifications regarding the use of funds to be raised by Sea Star from the public.
Sea Star plans to raise EUR 100 mln from institutional investors and another EUR 70 mln from Cypriot investors through a rights issue, which has run into trouble since the share price of Sea Star (SEAS) came under intense selling pressure and after Ventouris made public his concerns.
NEL is a competitor to ANEK, in which SEAS and Vardinoyiannis hold a controlling stake, but NEL says it is justified to seek the information in view of its holding of 2.000 shares in SEAS.
With the share price of SEAS under intense pressure and having traded below the EUR 0.26 exercise price, the CSE Council also decided to extend the period of Rights exercise until Thursday, December 6, 2007.
Investors are aware of a meeting between Ventouris and the CySEC on Monday in Nicosia, which probably forced the stock market regulator to apply pressure on SEAS to come forward with material information with respect to its recent activities, which NEL Chairman Ventouris claims should have been included in the original Prospectus.
Since the Prospectus was issued, SEAS has received a cash injection amounting to EUR 61 mln from Ioannis Vardinoyiannis as part of the EUR 100 mln capital raising package from institutional investors, but no shares have been issued, with the approval of the CySEC, since if this had been done before the whole EUR 170 mln issue has been completed, then the stake of Vardinoyiannis in SEAS would go above 50% and thus trigger the forced takeover of the company.
In addition, SEAS has also decided to take a 14.9% stake in ANEK, a Greek shipping company which is controlled by Vardinoyiannis, with the stake being sold by the sister of Vardinoyiannis at EUR 2.50 per ANEK share. Since then, the ANEK shares have nosedived to EUR 2, which creates another EUR 8 mln loss on the books of SEAS.
Sea Star has also pledged to take a stake in a ship management company for another EUR 17 mln in cash outflow, which Ventouris claims is also a suspect transaction and more information should be provided.
Ventouris has also charged the CySEC for not investigating a possible insider trading case, when the sister of Vardinoyiannis, Amalia, purchased shares in SEAS at EUR 0.09 and then sold them at EUR 0.42, thus realising a profit of EUR 7 mln in the process.
Sea Star meanwhile made an official announcement refuting the allegations made by Ventouris, describing them as an attempt to jeopardise its capital raising issue. Sea Star says it did ask for the suspension of trading on its shares, an extension of the exercise period of the rights issue, which were granted by the CSE. Sea Star says that it also asked and received permission from the CySEC to publish a supplementary prospectus to provide additional information to investors.
Sea Star has also asked the CySEC to investigate stock manipulation campaign on its share price, which closed at EUR 0.25 per share amid allegations that at the close, a particular broker is marking the price lower.
Sea Star has also instructed its lawyers to file charges against NEL Lines, its Chairman Apostolos Ventouris as well as other persons who are behind the malicious campaign as the company says in its announcement to jeopardise its rights issue. It has also sued Politis newspaper for running a paid advertisement on behalf of NEL, which Sea Star says is libel.
