The first IPO using ASX's new BookBuild facility turned into a farce, as it was used by Chinese investment companies to launch a new securities fraud. U&D Coal Limited (UND.AX) purportedly sought to raise $125m by selling 250m shares, constituting 20% of the company. In reality, this was a sham IPO taken up entirely by the existing owner cartel, not performed for the purpose of raising capital for a business, but performed solely to create a fake "market" price. This inflated "market" price, endorsed by the mongooses at ASIC, engineered a pre-IPO fantasy value of $500m for UND out of thin air, creating vast fake unrealized profits for the cartel owners. With 1.1bn shares outstanding, the top 20 shareholders own 99.8% of UND.
More than 99% of UND is owned by a cartel of three related entities. Australian Kunqian International Energy, a subsidiary of China's state-owned Henan Energy Chemical Group, owns 55% of UND. China Kunlun International Holding and Golden Globe Energy own a further 44% of the company, with these two mysterious entities sharing the same British Virgin Island P.O. box address and rathole director.
The ASX BookBuild facility raised $50,097,000 from the sale of 100,194,000 shares. Of these, the abovementioned Australian Kunqian bought 100,000,000. Another 150,000,000 shares were directly issued to the other two cartel members. Hilariously, the financial media still hailed this as a fine IPO, pretending UND now trades at a market price and shilling the share to granny investors.
To reiterate, a share can be 99.2% owned by three related entities based in BVI, and the cretinous sub-humans of Australian financial media will still pretend it trades at a "market" price. The media will shill literally any stock, no matter how obviously a vehicle for securities fraud. Prior to its sham IPO, UND bought Endocoal (EOC.AX) for $71m, using funds borrowed from China Construction Bank Corporation. According to page 3 of its annual report, a condition for this debt facility was that UND list on the ASX within a year.
The directors at UND include Dongsheng Wu, Mr Wang and Dr Dickie. But there is conflict brewing in the sausage factory, with Kunqian about to replace the board.
This inadvertently hilarious ASX disclosure plaintively describes the Company as being "utterly surprised and disappointed by this action". Heartbroken, the Company laments that "Kunqian has given no proper account of its conduct or decision."