the australian article

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http://www.theaustralian.news.com.au/business/story/0,28124,25317291-36418,00.html

Icon drops capital raising on fears of insider trading

Rebecca Urban | April 11, 2009

Article from: The Australian

ALLEGATIONS of insider trading in Icon Energy shares are being probed after the gas explorer admitted confidential plans for an impending capital raising might have been leaked to the market.

The Australian Securities Exchange is looking into suspicious trading in shares of the Gold Coast-based company, following its extraordinary revelation this week that confidentiality around an impending $10.8 million share placement had been breached.

Icon's share price slumped on Wednesday on abnormally high trading volumes, attracting the attention of the ASX and forcing the company to scrap the fundraising plan.

Responding to an official price query the next day, Icon confirmed that on the night of Tuesday, April 7 the board had resolved to approve a mandate with a corporate adviser to issue up to 45 million shares to professional investors at a price of 24c, which was a 14 per cent discount to that day's closing price of 28c.

The market was not yet advised of the plan as the board viewed the capital raising proposal as "incomplete" because "neither a detailed approach nor timetable had been agreed with the corporate adviser".

So when shares started tanking the next day -- at one stage falling beneath the proposed offer price for the placement -- the company requested a trading halt as "it believed that there was a real likelihood that a false market would be in existence". "This belief was premised on the fact the board believed, in its utmost good faith, that the confidentiality attaching to the placement was lost during the early part of the afternoon of April 8," Icon said in a letter to the ASX.

The company has since written to the financial adviser -- which it declined to identify, according to Icon chairman Ray James -- advising that the terms of the placement mandate had been frustrated. Mr James told The Weekend Australian that he was disappointed but was reluctant to discuss the matter as it was still the subject of investigation by the company and the ASX. "There was a breach of confidentiality. And while we know some background to that and have some ideas, we don't exactly know where it came from," Mr James said.

"That's being looked at."

A spokesman for the ASX, Matthew Gibbs, confirmed that the company's detailed response to the price query was being examined.

"I can't speculate on whether we think there's been insider trading or not. But if we do suspect there's insiders acting on privileged information, we will refer that to ASIC," Mr Gibbs said.

As a result of the fiasco, Icon has scrapped its plan to undertake a share placement and will instead announce a share purchase plan offer to existing investors.