Sunday, 28 September 2014

Protasco's Puzzling Purchase (7)

Three independent directors of Nexgram resigned according to announcements on the Bursa website (here, here and here).

The three directors were unanimous in their reason to resign:

"Because of the newspaper report on Protasco Berhad filing legal suit against a director of the Company."

Quite remarkable to give a development in another company as the reason for ones resignation.

The Star published an interesting article regarding this same matter: "More than meets the eye".


"The resignation of three Nexgram Holdings Bhd directors, following a suit by Protasco Bhd against Nexgram founder Tey Por Yee, has raised some eyebrows within industry circles. Observers are questioning the reasons for the directors resigning from Nexgram right away following the suit. The directors in question are Leou Thiam Lai, Ungku Razak Ungku Rahman and Yap Siok Teng. Nexgram, in announcing their resignations to Bursa Malaysia, said that they had resigned “because of the newspaper report on Protasco filing a legal suit against a director of the company”. It, however, did not elaborate. Questions are being raised as to whether there is something else brewing in Nexgram which caused this succession of events."


For the time being it seems Nexgram is "rather light" on independent directors. That however didn't stop the company (listed on the ACE market) from making another announcement, from The Star again:


"Nexgram, which started off as a mobile applications and platform provider, said the proposed acquisition would allow it to “participate in Fiji’s economic development and growth process, which is still currently in the early stages of development” and that the proposed deal would be financed by a combination of internal funds and/or bank borrowings."


I don't immediately see the synergy between a Malaysian based tech company and a Fiji based developer.

Regarding Protasco, an interesting situation seems to be that the company is not taking any steps to remove Tey Por Yee and Ooi Kock Aun as directors, despite filing a legal suit against them for "breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit".

Apparently, both Tey and Ooi are still welcome to stay on as directors of Protasco and to join board meetings.

There is quite an interesting web of connections between Protasco, Nexgram and PT Inovisi Infracom Tbk. To be continued.

Wednesday, 24 September 2014

Protasco's Puzzling Purchase (6)

Protasco further announced the following details:


Total amount of claims against the defendants

Against the 1st Defendant
-         A payment of USD22 million;
-         Pre-judgment interest on USD22 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
-         Post judgment interest on USD22 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum; and
-         Damages for the breach of the Restated SPA.

Against the 2nd and 3rd Defendants
-         A payment of USD27 million;
-         Pre-judgment interest on USD27 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
-         Post judgment interest on USD27 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum;
-         Damages for fraud and conspiracy; and
-         General damages, aggravated and exemplary.



Protasco must have filed their version of the chain of events related to the mysterious purchase with the court. These documents (and the possible articles the defence might produce) must contain many interesting details that are still unknown to many at this moment.

Except for this court case, the big question is if the authorities should take further action. The severity of the alleged events seems to suggest that they might have to look into that.

Monday, 22 September 2014

Protasco's Puzzling Purchase (5)

A pretty shocking (albeit not unexpected, at least for this blogger) announcement by Protasco:


Protasco Berhad (“Protasco” ) wishes to announce that Protasco has today filed a legal suit at the Kuala Lumpur High Court against PT Anglo Slavic Utama (“1st Defendant”) and two of its directors, namely Tey Por Yee (“2nd Defendant”) and Ooi Kock Aun (“3rd Defendant”) (“Legal Proceeding”).

Protasco’s claim against the 1st Defendant is for the refund of the Purchase Price paid under the Restated SPA dated 28 January 2014 and/or damages and/or for damages arising from the breach of contract. Apart from the Restated SPA being void, and as a further or alternative claim, as the Conditions Subsequent were not fulfilled within the Condition Period, Protasco proceeded to terminate the Restated SPA and demanded for the return of the Purchase Price from the 1st Defendant vide its letter dated 4 August 2014.
 
Protasco’s claim against the 2nd Defendant and the 3rd Defendant is premised on the breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit. Protasco is seeking damages against the 2nd Defendant and the 3rd Defendant.
 
Protasco wishes to state that the Legal Proceeding it has initiated has no significant immediate adverse impact on the current financial position of Protasco. Protasco will make impairment on the Purchase Price if necessary in consultation with its Auditors.

I wrote many times about Protasco and the rather strange proposed acquisition of the Indonesian oil & gas company which didn't seem to make much sense at all (at least to me), most notably here, here, here and here.

Thanks (of course) to the (anonymous) person who drew my attention to this interesting case in the first place. Keep the good comments coming!

Thursday, 18 September 2014

Wall Street Is About To Slowly Torture Macau Investors

I wrote before a very positive story about Macau, this time a very negative story.

The two are perfectly complimentary to each other: short term a bad outlook (partly due to a significant slow down in the Chinese economy), long term a good outlook.

On a personal note, a friend of mine is living in Macau for quite a while and has never seen a blue sky for such a long period. In other words, the Chinese factories, who usually are responsible for the air pollution, are not running on full steam. There are many other similar indicators.

Investors worldwide should be cautious.


From Business Insider:

"Wall Street is turning its back on Macau after months of gaming stock sell offs and the lowest revenue of any summer since 2012.

But it's happening slowly and painfully — with analysts shaving off a percentage point here and there as bad news just gets worse.

That shouldn't be the case, Ray Young of Sterne Agee argued in a recent note in which he took his gross gaming revenue [GGR] estimate to 0%.

Most analysts are still sitting around at 3%.

"We believe our new estimates eliminate a trend representative of “Chinese Water Torture” - constant minor downward estimate revisions on the heels of mostly known GGR disruptive issues," Young wrote.

In other words, all Macau's devils are already here.

This weekend, horrid economic data out of China served as another all-around reminder of what Macau was (and would continue to be) lacking for some time — enough gamers to play the games.
High roller play has suffered the most, disrupted by a $1.3 billion heist that sucked cash out of the financing system Macau uses to fund VIP play.

Even more disruptive has been Chinese President Xi's corruption campaign. After going to Macau and checking things out, Young believes that the campaign isn't just impacting high roller play. Mass market players are feeling it too, and things are about to get even more strict.

"A new anti-money laundering (“AML”) framework may be adopted in Macau within the next 30 days," Young wrote in a note. "While the framework has a few new components, one Government contact believes the real risk for some will be a new “spirit of enforcement” which will come in tandem with the new framework, especially as it relates to know your customer (“KYC”) rules."

In other words, the government might start to care about who spends money in Macau and where they got their money from."