Protasco, BFM interview

One kind soul pointed me at an BFM 89.9 interview with Datuk Chong Ket Pen, General Managing Director from Protasco. The interview can be found here. For those people who also like the video, the link is here.

The part about the oilfield acquisition starts around 19:30. Some quick notes by me, and my comments in purple:

• Due diligence is in process, a consultant has been appointed (would it not be better first to do due diligence and then do a deal?)
• Protasco has no real experience in oil & gas, but also in engineering, so hopefully synergy with their current engineering (many experienced hands burned their hands at the notoriously difficult industry)
• RM 170 million is the asking price, might be negotiated downwards (again, why the hurry, why not investigate first?)
• The RM 50 million cash paid is securitized and will be returned if the S&P agreement is cancelled (but against which securities at what value in which account, no details have been provided)
• There will be a profit guarantee which will be the basic justification of the deal (but only secured against shares which represent a small part of the deal)
• The deal is subject to renewal of the concession, which will expire in 2014 (again, why the hurry, why not first renew the concession?)
• An announcement will be made 5/6 weeks later than the interview (January 29, 2013), so somewhere in the middle of March 2013
• The previous Executive Deputy Chairman resigned a few months ago, no reason given
• The 10% Private Placement was meant for the oilfield acquisition

All rather vague, as far as I am concerned, all the red flags are still there. Most importantly, there is no justification whatsoever for either the purchase price or the profit guarantee. It is not that the company that will be acquired made any profits that are comparable, in the contrary, the numbers provided were tiny and loss making.

We will have to wait how things will develop.