Multi Sports: new allegations

I wrote before about Multi Sports.

Although the number of Bursa listed companies from China is only a bit more than one percent of the total, they are experiencing a hugely disproportionate part of the irregularities reported.

That is what more or less could have been expected, for instance based on the experience at the SGX.

Multi Sport is one of those Chinese listed companies on Bursa, beside the problems they already have, they announced new ones:


The Board in Malaysia has also just received details of alleged unreported finance transactions and litigation involving the Company’s operating subsidiary in China, Jinjiang Baixing Shoe Materials Ltd, and the Senior Management of the Company. Should the allegations be validated, such information would be material and would need to be incorporated into the Outstanding Annual Report.


When it rains it pours .....

Multi Sports: new independent directors

Article from The Edge "Multi Sports gets new independent directors", some snippets:


Multi Sports Holdings Ltd's shareholders had yesterday approved the appointment of six independent directors to oversee and revamp the shoe manufacturer's operations.

Today, Multi Sports told Bursa Malaysia that Multi Sports shareholders had at the company's special general meeting approved the appointment of Kasinathan Tulasi, Naren Anand Gill, Clarence Yeow Kong Chew, Cheh Chee Mun, Guan Swee Kee and Terence Selvarajah as directors.

Multi Sports major shareholder Paramjit Singh Gill had earlier requisitioned the shareholders' meeting.

Paramjit said he wished to appoint the independent Malaysian directors to "investigate and regularise" the company's operations.


It will be interesting to follow this case, both specifically regarding Multi Sports and in general regarding Chinese listed companies on Bursa.

Officially (according to its last quarterly report) the company has plenty of cash, but given the last quoted share price, there were not many people who actually believed those numbers.

Will Paramjit and his team be able to discover the true situation, what has happened to the company since it IPO-ed on Bursa? Will they be able to extract some value for the minority shareholders? Will Chinese regulators swing into action, when needed?

In my humble opinion shareholders of Multi Sports should count on a total loss, and the (alleged) perpetrators will go scot-free. I hope I am wrong and have to eat my words.

MSWG: concerns regarding Multi Sports Holdings

Below article is from MSWG's latest newsletter dated August 21, 2015. The concerns regarding Multi Sports Holdings (MSHL) in the "MSWG's comments" section all sound very valid, nothing to add. It is puzzling why a company which claims to have cash worth RM 360 Million is not using this cash to extract value for its shareholders, through a share buyback program or dividend pay-out scheme.

MSHL had on 20 August 2015 held 2 special general meetings (“SGMs”) for the proposed variation to the utilisation of proceeds raised from the sponsorship of the Taiwan Depository Receipt Programme (“TDRP”) (“Proposed Variation”), proposed par value reduction (“Proposed Par Value Reduction”) and proposed establishment of employee share option scheme (“Proposed ESOS”).

The Proposed Variation was approved by the shareholders voted by a show of hands, whereby the Proposed Par Value Reduction and Proposed ESOS was approved by the shareholders voted by way of poll.

Result on voting by poll is shown below:

[Source: MSHL’s announcement on Bursa Malaysia’s website on 21 August 2015]

MSWG’S COMMENTS:

The venue of the SGMs had been changed (at the same resort but different meeting room) at the eleventh hour without immediate notification to shareholders of MSHL. MSWG’s representative felt that it was not right to have done so without providing prior information. The Board agreed to delay the meeting for 20 minutes and also apologised to shareholders for alteration of the venue, as they were informed that the alteration was made by the management of Putrajaya Marriott & Spa without prior notification to the company. Nevertheless, MSWG felt it was imperative that the change of venue should have been posted at the original venue.

During the meeting, the shareholders raised many queries pertaining to resolutions on the Proposed Par Value Reduction and Proposed ESOS, and eventually the resolutions were not carried by a show of hands. The acting Chairman called for a poll vote for all the resolutions before the announcement of the result which were eventually approved as stated above.

MSWG had voted against the Proposed Par Value Reduction, as the company should not be granted the flexibility to raise more funds given the fact that it could not utilise fully its previous proceeds raised from TDRP. MSWG also voted against the Proposed ESOS, as the exercise allows employees to subscribe up to 15% of the company’s new shares at a 10% discount to the 5-day weighted average market price and this would greatly dilute the interest of existing shareholders. The market price of MSHL was RM0.08 as at 20 August 2015, which was 0.08 times to the book value of the Group (the Group’s net asset value per share was RMB1.73 or approximately RM0.98).