Report filed: People walk through the reception area of the Singapore Exchange headquarters. In a submission to the SGX, an activist group is accusing Jera of withholding critical information on financial and legal risks in relation to a bond issue. — Bloomberg
SINGAPORE: An activist group has filed a whistleblowing complaint with the Singapore Exchange (SGX) accusing Jera, Japan’s largest power company, of failing to disclose critical information on financial and legal risks in relation to a US$300mil (S$398mil or RM1.3bil) bond issued in April 2022.
The bonds are listed on the exchange.
Market Forces, an environmental finance organisation, tracks fossil fuel financing, and lodged its complaint through the SGX Whistleblower Office yesterday.
It accuses Jera of omitting key information, including the risks of investing in liquefied natural gas (LNG) when the Russia-Ukraine war has increased LNG price volatility, as well as not mentioning a lawsuit in Australia.
Jera and the SGX have been approached for comment.
Jera issued the bonds, which have a tenor of five years and a coupon of 3.665%, on April 14, 2022.
The bond is subject to the Securities and Futures Act, the SGX Rulebooks and SGX investigatory powers, the complaint said.
“Jera omitted information and failed to provide sufficient details to enable investors to understand and appreciate the risks associated with investing in the company’s US dollar bond issued on the Singapore Exchange.”
Referring to the firm’s ongoing disclosure obligations, the complaint also accused Jera of failing to provide information material to potential bond investors in an offering circular dated April 7, 2022, and in subsequent public information.
It noted that the fossil fuel industry, including the LNG sector, “is highly susceptible to systemic risks, including major geopolitical events and climate change.
“As an energy company with significant exposure to the entire LNG value chain, Jera’s disclosure of the risks facing the LNG industry and how the company intends to manage those risks is severely lacking”.
The complaint also said that LNG demand projections in key growth markets in Asia have been cut because of limited availability and high prices caused in part by Russia’s invasion of Ukraine, with volatility expected to continue for years to come.
“As long as unaffordable LNG and procurement challenges persist, US$96.7bil (RM420bil) of proposed LNG-related infrastructure projects in Pakistan, Bangladesh, Vietnam and the Philippines will face a heightened risk of under-utilisation or cancellation.”
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power-generation costs and will not build new gas-fired plants in the coming years, Reuters quoted the country’s Energy Minister as saying on Monday. He cited high LNG costs.
Market Forces said the price volatility risks from the war in Ukraine could have a short-term impact on the company’s operations and the Japanese economy.
Jera also failed to produce an analysis demonstrating the risks and its alignment with decarbonising on a pathway to net-zero emissions by 2050, it added.
“Jera’s omissions deny investors sufficient information to form a full and proper understanding of the Japanese power giant’s business, financial conditions and prospects,” said Market Forces.
Jera has broadly mentioned litigation risks, but it did not disclose full details.
“Jera has failed to disclose major legal risks, with litigation underway in Japan and Australia relating to a new coal power project outside Tokyo and the Australian Barossa gas field opposed by Tiwi Islands First Nations leaders,” said Dr Sachiko Suzuki, Japan senior climate finance analyst at Market Forces.
“It’s vital that Jera comes clean with investors and is held to account for hiding the growing risks posed by its investments in fossil fuels,” Dr Suzuki said in a statement.
The complaint is part of a growing number of actions taken by shareholders, conservation groups, and others against fossil fuel companies, accusing them of misleading conduct or investment decisions that threaten to accelerate climate change.
Earlier this month, a group of investors said it would file the first lawsuit of its kind against 11 members of petrochemical giant Shell’s board, accusing them of failing to manage the company’s climate risks. — The Straits Times/ANN
