Monday, 30 May 2016

Amin Shah and the Singapore-Batam ferry (4)

I have written before about this matter (here, here and here).

I still remember Amin Shah's company placing an add in the newspaper asking for applicants for 50 CEO positions. Or Amin Shah being the proud owner of an Italian ferry. Yes, those were the times .....

Back to the Singapore-Batam ferry, it looks like Affin is involved in this, as the company announced, some snippets:

The Plaintiff [Abu Bakar bin Ismail] claims against ABB [AFFIN Bank Berhad] vide the  above Writ of Summons and Statement of Claim dated 22 January 2016 for the following:-
  1. RM56,885,317.82 together with interest at 5% per annum from 1999 till full settlement as alleged damages; 
  2. SGD9,928,473.75 together with interest at 5% per annum from 2013 till full settlement as alleged losses;
  3. RM776,331.00 being alleged losses of Plaintiffs’ shares in Berlian Ferries Pte. Ltd [the Singapore-Batam ferry operator] which was transferred out as a result of his bankruptcy in 2013 with interest at 5% per annum from 2013 till full settlement as alleged losses;
  4. RM500,000 as cost in respect of legal  proceedings in Singapore.
ABB  had on 25 January 1996 given Suria Barisan (M) Sdn Bhd (“Suria”) a credit facility of RM21.6 million (“Facility”) against security of unquoted shares belongs to Naval Dockyard Sdn Bhd and guarantees by the Plaintiff and Puan Norashikin Binti Abdil [probably: "Abdul"] Latiff (“Guarantor”).

Suria, the Plaintiff and Guarantor (“All”) defaulted in the Facility which led to ABB filing a debt recovery action against All of them in 1999. Judgement was obtained against All on 8 July 2004.                                     

The Plaintiff was made bankrupt on 17 January 2013. However in September 2015, the bankruptcy was set aside on the grounds that he was solvent due to a third party, Chenet Finance Ltd (“Chenet”) being ordered by a Singapore Court to pay damages to the Director General of Insolvency Malaysia (“DGI”) as receiver of Plaintiffs’ Estate. ABB has appealed and Case Management has been fixed on 24 June 2016.

Saturday, 28 May 2016

AirAsia: were all parties at the EGM equally informed?

AirAsia announced its latest quarterly results, the results were great, way above expectations and the share rose RM 0.28 to RM 2.40.

Yes, life can be good, that is, if you are a shareholder of AirAsia.

But life can be even better if you are allowed to buy 559 millions AirAsia shares at a price of RM 1.80.

And that is exactly what Tony Fernandez (Group CEO) and Kamarudin (Executive Chairman) are allowed to do through a private placement (PP). One of the largest I have seen on Bursa done by controlling shareholders.

On May 9, 2016 at the EGM non-interested shareholders approved the PP, as is required by the rules. So is everything above board?

Well ...... there is a nagging issue if all parties actually had the same information available at the EGM.

On one side surely Fernandez and Kamarudin must have known about the 2016/Q1 results, may be not in all detail yet, but at least the key numbers, and they must have known that the numbers were way better than expected by the analysts and the market.

On the other side, the non-interested shareholders were left in the dark, the official results were simply not yet announced, that would happen only about three weeks later.

According to data from Bloomberg analysts were surprised by the numbers: the results were 400% above expectation, pretty stunning.

The authorities should look into this situation, shareholders are supposed to have roughly the same amount of information when making an informed decision. The possible insiders knowledge of the Q1/2016 results appears to be material. If there was indeed a clear information bias, then minority shareholders should have been protected.

As written before, the whole issue could have been easily avoided if the company had replaced the PP by a rights issue of the same size, allowing all shareholders to participate.

Friday, 27 May 2016

Alibaba investigated over accounting practices (2)

In addition to yesterdays posting about Alibaba, I like to point to a posting on "China Accounting Blog" (which is anyhow always a good source of information for all accounting matters related to China): "BABA v the SEC".

There are three issues at hand, all described by Paul Gillis:

The first relates to consolidation policies and practices (including accounting for Cainiao Network as an equity method investee).  

The second issue is related party transactions. BABA certainly has plenty of them and they have been a major concern for shareholders, especially since Alipay was taken out of the BABA structure.

The third issue relates to the reporting of operating data from singles day (November 11, the biggest online commerce day of the year in China). 

Regarding the third issue I also refer to an old posting.

Thursday, 26 May 2016

Alibaba investigated over accounting practices

From Bloomberg: "Alibaba Facing SEC Investigation Over Accounting Practices"

Some snippets:

Alibaba Group Holding Ltd. fell the most in four months after the e-commerce giant said it’s being investigated by the U.S. Securities and Exchange Commission over its accounting practices and whether they violate federal laws.

The regulator is looking at data reported from the company’s Singles’ Day promotion, Alibaba’s biggest shopping day, and how Alibaba consolidates results from affiliated companies, including logistics partner Cainiao Network, the Hangzhou, China-based company said in its annual report. Alibaba said it’s providing documents and cooperating with the probe, which is also examining related-party transactions.

Not a new issue, I blogged about this issue before.

Many brokers are reiterating that "the auditor is PWC", but what they're missing (or conveniently ignoring) that its not actually PWC who's auditing them, but a local Mainland Chinese affiliate ...