Tuesday, 11 November 2014

Protasco: where is the transparency?

The Edge, KiniBiz and The Star are actively writing about Protasco these days, and one can't blame them. There is a mud-slinging match going on between Tey and Chong, which is always good for some interesting news, that is what people like to read. Finally details (some unconfirmed) have been revealed in these articles, details that should have been revealed by Protasco itself a long time ago.

One important question in all of this is, which party is right?

But at least as important is the question: where is and was the transparency in all of this?

The deal in question started almost two years ago, and the official news as revealed by Protasco has been very, very limited, and most of it very much delayed.

January 2013 I wrote "Protasco's Puzzling Purchase" in which I asked the following questions:

  • Protasco does not seem to have relevant experience in the notoriously difficult oil and gas industry, why does it want to take so much risk, especially in Indonesia with poor corporate governance?
  • PT ASI is only a few months old: "PT ASI was incorporated in Indonesia on 6 September 2012 as a private limited company".
  • PT ASI only has one director who hardly owns any shares. No background of this director is given.
  • The vendor is 99% owned by Anglo Slavic Petrogas Ltd, a company registered in the British Virgin Islands, no background is given, a search on the internet returns nothing; who is behind this company, what is their track record?
  • The company structure of PT ASI owning part of PT FAS owning PT Haseba is rather artificial, why is such a difficult construction chosen?
  • Who are the minority shareholders of PT FAS and PT Haseba?
  • On the signing of the S&P, Protasco will pay RM 50 million cash, why so much? This is about 30% of the total amount, much higher than normal in comparable deals.
  • On November 1, 2012 PT ASI signed a S&P agreement to buy an additional 46% of PT FAS. What was the price paid for that stake? Why does Protasco not wait until this deal is panned out?
And further on:
  • ..... the production agreement will expire in 2014 (next year!) and it is not sure if PT Haseba is able to negotiate a new contract, and if so under what conditions. Why buy into a company with so much uncertainty?
  • "The KST Field was founded in 1972 and operated by PT Pertamina Doh Nad Sumbangut until 1997. Thereafter, in 2004, Pertamina awarded PT Haseba a 10-year PMP Agreement for KST Field.".  Why the gap of seven years? Also, this field seems to be pretty old, often yields are not that great in old fields. Why can't Protasco give some production numbers for KST Field?
  • Why are no preliminary results for 2012 given? At least the half year numbers should be made available? And why are all the financial statements not audited?
  • What are the results for PT FAS for the last three years?

Most of these questions are now, almost two years later, still never dealt with.

Soon shareholders have to vote in two subsequent EGMs on the directorship of Tey, Ooi and Chong.

But based on what information, if so much is still never revealed?

The winner in the on-going battle will be a bruised winner. And lots of doubt will continue as long as the air is not properly cleared.

The other directors (especially the independent ones) of Protasco also should evaluate the corporate governance standards of the company. A big improvement is urgently needed.

And then there is still another matter. How much of the money paid by Protasco can be recovered? Shares of Indonesia listed PT Inovisi Infracom Tbk were held in trust, but the share price has tanked recently.

Protasco has initiated legal proceedings to reclaim the money, but court cases in Malaysia (when appealed) can easily take ten years to conclude. And in this case two other countries are involved, Indonesia and the British Virgin Islands, making things much more difficult.


  1. Mr. Wind, are you following MEGB? Interesting corporate developments are currently taking place in the company. The MD is cashing out while SMRT and Creador (Brahmal) come to the "rescue"

  2. Thanks, will indeed follow up on this, need some time though.