Several financial institutions, including a number of stand-alone brokerages, may be facing millions in losses after they were forced to dump shares in Kenmark, previously held as collaterals, at rock bottom prices. They were forced to sell the pledged Kenmark shares after their clients were unable to top up their margin accounts. The margin call was triggered after the stock price sank below a pre-determined threshold level. The loses they suffered are a few millions ringgits.
Based on Kenmark’s 2009 annual report, as much as 80 million shares were pledged by the company’s shareholders at various financial insititutions. Kenmark’s total issued and paid up capital stood at 180 million shares. The company share price went into a free fall from 78 sen on May 28 to a record low of 6 sen on Tuesday. It was last transacted at 11.5 sen on Wednesday before trading was suspended by the exchange. And the stock will resume trade today.
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