Thursday, 21 February 2013

Protasco, where is the transparency?

I wrote in January Protasco's Puzzling Purchase based on an announcement by Protasco, made in December 2012, to acquire for RM 170 million a part of an Indonesian company, which owns a part of a company, which owns a part of a company, which owns a license until 2014 to exploit an Indonesian oil and gas field.

The number of red flags and lack of information regarding this deal were rather stunning.

It is now almost two months ago and no news has been reported regarding this huge deal.

Yesterday the (amended) quarterly report for the year ending December 31, 2012 was announced.

One would expect to get at least an update regarding this matter, but mysteriously, there is nothing to be found.

Some snippets from the report:

"9. Subsequent events
There were no significant events subsequent to the end of current quarter under review.
10. Changes in Composition of the Group
There was no material changes in the composition of the Group during the interim period ended 31 Dec 2012."

16. Commentary on Prospects
The Group is also exploring new business opportunities to complement the existing
business segments. Barring unforeseen circumstances, the Board of Directors is reasonably optimistic that the Group will be able to improve its performance in the next financial year.

21. Corporate Proposals
There were no corporate proposals announced but not completed during the current quarter."

And even in paragraph "12. Capital Commitments" there is no mentioning of the possible acquisition which would impact the company so much.

Finally, "hidden" in the cash flow statement we can find the following:

"Net cash outflow on acquisition of a subsidiary (RM 50,000,000)"

And since PT Asi is not yet a subsidiary, I am not even sure if this statement is correct.

It does not look like Protasco is aiming to win the prize for the best Corporate Governance. The lack of transparency on its proposed acquistion is remarkable, to say the least.

So far Bursa Malaysia, Securities Commission and MSWG have not yet visibly taken action (Bursa Malaysia has not even queried Protasco), but hopefully they are working on the case behind the scenes.


  1. Protasco is currently doing a due diligence of the proposed acquistion. Naturally, they cannot reveal much because the management has said, if the terms and not right, they will abort.

    The Group MD was interviewed in BFM last month or so which should shed some light.

  2. Thanks, will try to find the link to the BFM interview. If anybody has it, please let me know.

    For your information, they have transferred out already 50m Cash! Not exactly peanuts.

    And that cash is not held by a trustee, but some shares (value unknown) at some account (also unknown).

    Whichever way one looks at it, the transparency regarding this deal is just very insufficient.

  3. I think the 50m is something of a bond payment which will be refunded should the deal be aborted. It is like a refundable deposit.


  4. May be, but 50M is a lot of money, and details are hard to come by. Good corporate governance is all about proper and timely disclosure, being transparent, etc.

  5. I wonder whether this RM50 million payout has anything to do with that Indonesian company where their new director, Ooi Kock Aun has served as a Finance Director / CFO. Is this an RPT? Is this legal? Or sheer co-incidence?

  6. All shrouded in mystery, I guess we have to wait for further news, hopefully soon. I am also very curious.

  7. Group MD said deal would be aborted if development rights cannot be extended by another 10 years on BFM.

  8. But the deal was announced 4 months ago, still no news, investors are in the dark. Even if 10 years development rights, how about the profits? So much uncertainty, so many questions.