BWRC stocks plummet 40%, trading frozen

BW Resources Corp. and Armstrong Holdings Inc., two companies of businessman Dante Tan, suffered a heavy sell-out yesterday, fueled by rumors affecting their respective businesses.

The prices of both stocks touched a 40-percent low during the course of trading, forcing the Philippine Stock Exchange to suspend their transactions.

The PSE suspends the trading of stocks if their prices go up by 50 percent or more or plunge 40 percent from the closing prices in the previous trading session.

BW was the most active stock in yesterday's trading at the PSE. Before the freeze in its trading, a total of about 31.84 million BW shares valued at P481.2 million changed hands, accounting for 22.5 percent of the market's total turnover of P2.139 billion.

BW closed at P12.75 per share yesterday, down the previous close of 21.25 last Friday. It hit an intra-day high of P22, before plunging to P12.75 when the PSE automatically suspended trading at 10:35 a.m.

Armstrong Holdings Inc., the holding firm for major BW stockholder Dante Tan's investments, also suffered a similar fate. Its price similarly plummeted 40 percent to close at 4.7 per share, down from P6.58 last Friday.

A BWRC official, however, assured stockholders that the stocks would bounce back and said these could have been affected by the negative rumors regarding a failed trading of BW shares last week, but which was denied by Securities Clearing Corp. of the Philippines vice president Charlie Velayo and PSE assistant corporate secretary Joseph Roxas.

Rumors circulated at the trading floor that an unidentified broker failed to cover for P481.2 million worth of BW shares and was on the brink of collapse.

"The company is still confident that its shares will bounce back after the market realizes the veracity of the rumor," the official said.

He added that one of BW's projects, the Jumbo Palace floating restaurant docked behind the Folk Arts Theater at the Cultural Center complex, will continue its planned soft opening today (Jan. 11) and will give the public a free guided tour until its formal launch on Jan. 23.

Stock market analysts also pointed to market jitters over the impending release of the Securities and Exchange Commission led investigation on the alleged stock manipulation, insider trading and other irregularities in BW transactions last year, which could backfire on Tan's own admission before the Senate that he himself accumulated BW shares.

Another analyst said the huge selldown could be tied up to the lapse of the lock-up period in the asset-for-share swap between BWRC and Megaworld Corp., which resulted in Megaworld acquiring 1.2 billion BWRC shares and a controlling 72 percent interest in BWRC, in return for Megaworld's turnover of the Sheraton Marina Complex project to BWRC.

The swap was valued at par, or only P1 per share.