Almost five years ago, Protasco announced what arguably is one of the most puzzling announcements I have seen of any Bursa listed company.
It was made during the XMas holiday as if to escape any attention, which (if intended) did indeed succeed, there was hardly anything written about the deal in the papers, while Bursa did not issue any query which is remarkable given the lack of details given.
I received an anonymous tip about it, and wrote "Protasco's Puzzling Purchase", and followed it up by about 30 other blog postings.
At the start of 2016 things finally seemed to move forward, I wrote "Former Protasco director charged with RM 68 Million fraud".
Now, after another two years, according to a recent article in The Star, "Ex-directors discharged from cheating case":
Two former company directors who were charged with cheating the board of directors, making a false declaration and criminal breach of trust involving more than RM80mil have been discharged from the case.
However, Datuk Ooi Kock Aun, 49, and Datuk Tey Por Yee, 40, have not been acquitted by the court.
The order to discharge but not acquit them was given by Kajang Sessions court judge Surita Budin after deputy public prosecutor Muhammad Ilmami Ahmad made a proposition to withdraw the case.
The DPP said the Attorney-General’s Chambers had reviewed all the evidence in totality before deciding to withdraw the case.
Ooi and Tey were accused of cheating Protasco Bhd’s board of directors and its officers by withholding information that he had direct involvement with PT Anglo Slavic Utama, a company incorporated in Indonesia.
The offence, under Section 420 of the Penal Code for cheating, was allegedly committed at Protasco’s office at Level 2, Corporate Building Unipark Suria, Jalan Ikram-Uniten, Kajang, between November 2012 and Jan 30, 2014.
Both of them were also charged with making a false declaration to a Commissioner for Oaths in Jalan Metro Pudu, off Jalan Yew, on July 25, 2014.
Other papers have been very quiet about this discharge.
Where does this leave the minority investors of Protasco, which lost almost RM 100 Million in this case and a (possibly related) other investment in Indonesia?
Until now hardly any information has been provided, the most basic questions have been unanswered, for instance: who was the seller of the PT Anglo Slavic shares (in other words, the owner(s) of the BVI company)? And was he/she in any way connected to any of the then acting directors of Protasco?
It seems very unclear what the current status is, both from the regulators point of view or from Protasco's side. A very unsatisfactory situation all together.
Showing posts with label Protasco. Show all posts
Showing posts with label Protasco. Show all posts
Sunday, 1 October 2017
Saturday, 16 January 2016
Former Protasco director charged with RM 68 Million fraud
From Bernama:
"A former director of Protasco Bhd was charged in the Ampang Sessions Court today with fraud involving RM68 million, and making a false declaration, four years ago.
Datuk Tey Por Yee, 40, claimed trial to both charges.
On the first charge, he is accused of concealing information from the company's board of directors and officers that he had a vested interest in a company, PT Anglo Slavic Utama in Indonesia.
In so doing, he allegedly misled the victims into entering into an oil and gas investment agreement with PT Anglo Slavic Utama through the purchase of 63 per cent of PT Anglo Slavic's shares in Indonesia worth USD22 million (RM68,393,170).
The payment for the shares was allegedly channeled in stages to two CIMB PT ASU accounts.
Tey is accused of committing the offence at Protasco Bhd's office at Corporate Building Unipark Suria, Jalan Ikram-Uniten, Kajang here, between November 2012 and Jan 30, 2014.
On the second charge, he allegedly made a sworn false statement before Wern Li Morsingh, a Commissioner of Oaths that he did not have any vested interests in PT Anglo Slavic Utama, whether as a director or shareholder.
He is accused of committing the offence in the company's conference room at the same place on July 25, 2014."
Almost exactly three years ago I wrote "Protasco's Puzzling Purchase", the start of many articles about Protasco.
I wrote:
"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?"
In the second instalment of the series of articles I asked the question:
"An anonymous person pointed at the possible role that Adrian Ooi Kock Aun plays in the deal, he was appointed to the board of Protasco just before the deal was announced December 2012. He is the CFO of PT Inovisi Infracom Tbk, an Indonesian listed company that also invests in oil & gas. The guarantees that are given out are based on a large block of shares of PT Inovisi Infracom Tbk. Surely Adrian Ooi must be aware of the identity of this large shareholder who is most likely the person/company behind Anglo Slavic Petrogas, the seller. Should this information not be made public?"
It looks like the announced court case is hitting directly at the above issued raised, it will be interesting to follow.
Another question that remains unanswered: should the Board of Directors of Protasco have been more active in digging for information in this case? The same question can be asked regarding the authorities.
"A former director of Protasco Bhd was charged in the Ampang Sessions Court today with fraud involving RM68 million, and making a false declaration, four years ago.
Datuk Tey Por Yee, 40, claimed trial to both charges.
On the first charge, he is accused of concealing information from the company's board of directors and officers that he had a vested interest in a company, PT Anglo Slavic Utama in Indonesia.
In so doing, he allegedly misled the victims into entering into an oil and gas investment agreement with PT Anglo Slavic Utama through the purchase of 63 per cent of PT Anglo Slavic's shares in Indonesia worth USD22 million (RM68,393,170).
The payment for the shares was allegedly channeled in stages to two CIMB PT ASU accounts.
Tey is accused of committing the offence at Protasco Bhd's office at Corporate Building Unipark Suria, Jalan Ikram-Uniten, Kajang here, between November 2012 and Jan 30, 2014.
On the second charge, he allegedly made a sworn false statement before Wern Li Morsingh, a Commissioner of Oaths that he did not have any vested interests in PT Anglo Slavic Utama, whether as a director or shareholder.
He is accused of committing the offence in the company's conference room at the same place on July 25, 2014."
Almost exactly three years ago I wrote "Protasco's Puzzling Purchase", the start of many articles about Protasco.
I wrote:
"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?"
In the second instalment of the series of articles I asked the question:
"An anonymous person pointed at the possible role that Adrian Ooi Kock Aun plays in the deal, he was appointed to the board of Protasco just before the deal was announced December 2012. He is the CFO of PT Inovisi Infracom Tbk, an Indonesian listed company that also invests in oil & gas. The guarantees that are given out are based on a large block of shares of PT Inovisi Infracom Tbk. Surely Adrian Ooi must be aware of the identity of this large shareholder who is most likely the person/company behind Anglo Slavic Petrogas, the seller. Should this information not be made public?"
It looks like the announced court case is hitting directly at the above issued raised, it will be interesting to follow.
Another question that remains unanswered: should the Board of Directors of Protasco have been more active in digging for information in this case? The same question can be asked regarding the authorities.
Thursday, 2 July 2015
Ire-Tex: MD resigns and is reappointed same day
A remarkable set of events, the company has provided the following clarification:
Reference is made to the Company’s announcement on 29 June 2015 in relation to the retirement of Dato’ Dr Yap Tatt Keat (“Dato’ Dr Yap”) as Managing Director and his subsequent re-appointment on the same day.
The Board of Directors wishes to inform that Dato’ Dr Yap had expressed his intention for early retirement effective from 29th June 2015, post the Company's 13th Annual General Meeting (“AGM”) after 20 years of service with the Ire-Tex Group. Hence, he did not offer himself for re-election at the AGM.
However, due to concerns raised by key stakeholders namely bankers, customers and suppliers, to Dato’ Dr Yap's unexpected early retirement, the Board of Directors had persuaded Dato’ Dr Yap to defer his retirement plans. Consequently, in the best interest of Company, Dato’ Dr Yap had accepted his re-appointment as Managing Director of the Company in the Board meeting held immediately after the AGM. As such, he will remain in the Board until a succession plan is put in place.
Ire-Tex is a company with several, possibly large, problems.
It has just acquired subsidiaries which don't seem to be performing well at all:
There was a large variation in results, always a red flag:
Many changes in directorship in the last year:
In addition to that, the following "emphasis of matter":
An investigative accountant has been appointed, with a very wide scope, 28 action points in total, including allegations in an anonymous letter.
The largest shareholder of Ire-Tex is Tey Por Yee, the third largest is Ooi Kock Aun, the same duo we already met in the Protasco affair:
Reference is made to the Company’s announcement on 29 June 2015 in relation to the retirement of Dato’ Dr Yap Tatt Keat (“Dato’ Dr Yap”) as Managing Director and his subsequent re-appointment on the same day.
The Board of Directors wishes to inform that Dato’ Dr Yap had expressed his intention for early retirement effective from 29th June 2015, post the Company's 13th Annual General Meeting (“AGM”) after 20 years of service with the Ire-Tex Group. Hence, he did not offer himself for re-election at the AGM.
However, due to concerns raised by key stakeholders namely bankers, customers and suppliers, to Dato’ Dr Yap's unexpected early retirement, the Board of Directors had persuaded Dato’ Dr Yap to defer his retirement plans. Consequently, in the best interest of Company, Dato’ Dr Yap had accepted his re-appointment as Managing Director of the Company in the Board meeting held immediately after the AGM. As such, he will remain in the Board until a succession plan is put in place.
Ire-Tex is a company with several, possibly large, problems.
It has just acquired subsidiaries which don't seem to be performing well at all:
There was a large variation in results, always a red flag:
Many changes in directorship in the last year:
The accounts were qualified (always a large red flag):
In addition to that, the following "emphasis of matter":
An investigative accountant has been appointed, with a very wide scope, 28 action points in total, including allegations in an anonymous letter.
The largest shareholder of Ire-Tex is Tey Por Yee, the third largest is Ooi Kock Aun, the same duo we already met in the Protasco affair:
Friday, 28 November 2014
Protasco: Tey and Ooi are out
Yesterday the company announced:
.... that its solicitors attended court today for the hearing of the Company’s application to set aside the ex-parte injunction order that Global Capital Ltd and Kingdom Seekers Ventures Sdn Bhd obtained on 25 November 2014 against Dato’ Sri Chong Ket Pen and two others from exercising their voting rights on shares which they own directly or indirectly in the Company with respect to the resolutions to remove Tey Por Yee and Ooi Kock Aun as directors of the Company.
The Company wishes to inform that the ex-parte injunction order was set aside at 2.15pm today with an order of costs in favour of the Company and Dato’ Sri Chong and two others. By reason of the setting aside of the ex-parte order, the Extraordinary General Meeting which was adjourned to 3.00pm today proceeded as scheduled.
The shareholders voted overwhelmingly to remove Tey Por Yee and Ooi Kock Aun as directors of the Company with immediate effect.
In favour: 170,428,382 95.66%
Against: 7,728,200 4.34%
The result is not so much a surprise, although the majority is much larger than expected. Most likely because Tey (and associated parties) didn't vote since he walked out of the meeting.
The outcome of the second EGM should be pretty straightforward as well.
Now that this has been settled, Protasco can continue with its normal business.
In addition to that:
.... that its solicitors attended court today for the hearing of the Company’s application to set aside the ex-parte injunction order that Global Capital Ltd and Kingdom Seekers Ventures Sdn Bhd obtained on 25 November 2014 against Dato’ Sri Chong Ket Pen and two others from exercising their voting rights on shares which they own directly or indirectly in the Company with respect to the resolutions to remove Tey Por Yee and Ooi Kock Aun as directors of the Company.
The Company wishes to inform that the ex-parte injunction order was set aside at 2.15pm today with an order of costs in favour of the Company and Dato’ Sri Chong and two others. By reason of the setting aside of the ex-parte order, the Extraordinary General Meeting which was adjourned to 3.00pm today proceeded as scheduled.
The shareholders voted overwhelmingly to remove Tey Por Yee and Ooi Kock Aun as directors of the Company with immediate effect.
In favour: 170,428,382 95.66%
Against: 7,728,200 4.34%
The result is not so much a surprise, although the majority is much larger than expected. Most likely because Tey (and associated parties) didn't vote since he walked out of the meeting.
The outcome of the second EGM should be pretty straightforward as well.
Now that this has been settled, Protasco can continue with its normal business.
In addition to that:
- Attempts to recover the money spend, RM 85 Million;
- Damage control;
- An honest assessment of the remaining Board of Director members on the past two years;
- A huge improvement in its Corporate Governance standards, especially in transparency towards its shareholders.
The authorities have their work cut out for them, it appears that quite a few rules have been breached.
Wednesday, 26 November 2014
Protasco: messy, messier, messiest
Protasco announced yesterday its quarterly results.
In it a RM 85 Million impairment on its messy "adventure" in Indonesia. No word about the guarantee that was given in the form of shares in a listed Indonesian company, PT Inovisi Infracom TBK.
Pages 13, 14, 15 and 16 contain details regarding the many court cases that are on going.
Today Protasco announced that its first EGM (there will be two) was twice postponed.
It can't really get much worse than that.
Was the management warned? Yes, please check this posting where lots of critical questions were asked by the reporter of BFM (the almost two years old interview is still available) to the General Managing Director.
One question from that interview and my comment:
"The deal is subject to renewal of the concession, which will expire in 2014 (again, why the hurry, why not first renew the concession?)"
Someone informed me that the reason the whole deal did not go through was that the concession was only renewed for a short period (again, this information is not revealed by the company, as so many other details).
So again, why the hurry, why did Protasco not wait for the renewal details, why did it want to close the deal so quickly and transfer RM 50 Million to the vendor (details of which are still not revealed)? And why did it (much later) even increase the potential loss further to the current RM 85 Million?
Unworthy for a Bursa listed company, if one would ask me.
Where are the regulators?
In it a RM 85 Million impairment on its messy "adventure" in Indonesia. No word about the guarantee that was given in the form of shares in a listed Indonesian company, PT Inovisi Infracom TBK.
Pages 13, 14, 15 and 16 contain details regarding the many court cases that are on going.
Today Protasco announced that its first EGM (there will be two) was twice postponed.
It can't really get much worse than that.
Was the management warned? Yes, please check this posting where lots of critical questions were asked by the reporter of BFM (the almost two years old interview is still available) to the General Managing Director.
One question from that interview and my comment:
"The deal is subject to renewal of the concession, which will expire in 2014 (again, why the hurry, why not first renew the concession?)"
Someone informed me that the reason the whole deal did not go through was that the concession was only renewed for a short period (again, this information is not revealed by the company, as so many other details).
So again, why the hurry, why did Protasco not wait for the renewal details, why did it want to close the deal so quickly and transfer RM 50 Million to the vendor (details of which are still not revealed)? And why did it (much later) even increase the potential loss further to the current RM 85 Million?
Unworthy for a Bursa listed company, if one would ask me.
Where are the regulators?
Sunday, 23 November 2014
"Pity the Protasco minorities"
Good article from Errol Oh in The Star: "Pity the Protasco minorities, 2 EGMs in 3 days", some snippets (emphasis mine):
This column has argued against the requisitionists’ opacity, and has pointed out that transparency and willingness to engage with minority shareholders will earn goodwill.
The recent developments at Protasco, which calls itself an infrastructure development provider, take us to the other extreme, and it’s equally troubling and frustrating. Here, the problem is not that the principal players are not saying anything. On the contrary, a lot of information is flowing out from both sides, directly and openly or otherwise, but there are so many allegations and counter-allegations of wrongdoings that the minority shareholders can’t be expected to make confident conclusions as to whom they should back.
Lawsuits have been initiated and the saga will probably drag on for many months at least. The EGMs are by no means the final battles, but they’re important because a board seat is a valuable vantage point.
The EGMs are lawful as long as they’re convened and conducted according to the Companies Act’s provisions and the company rules. However, there’s more happening now than those meetings. The brawl has spilled over into the media and the blogosphere, and one wonders how much of this fits the requirement for “full, accurate and timely disclosure”.
Also, there’s little indication that the regulators are at hand to prevent things from going too far. Bursa Malaysia and the Securities Commission may prefer the quiet and subtle way of delivering warnings and gathering facts, but they should also recognise that the unusual events at Protasco offer them a unique opportunity to draw the line between disclosure and negative campaigning. When there’s plenty of mudslinging going on, nobody walks away spotless.
I think this is one of those moments that the regulators and the independent directors of Protasco should step up their game. Sometimes working behind the scene is possible (and may be even preferable), but not in the above case. I think actually a lot of the problems could have been avoided if regulators and/or independent directors had been more active in the first quarter of 2013, almost two years ago. If they had asked the right questions and done independent research then a lot of information would have been gathered.
Please use Google and the keywords "protasco board tussle" to find the many blogs about this case.
"Executive editor Errol Oh is only sure that Chong and Tey can’t both be right."
Correct, and I don't even exclude the possibility that both sides are (at least to some extent) wrong.
The proposed acquisition was always announced as a "non related party transaction" even as recent as August 5, 2014 :
I strongly doubt that was the case.
This column has argued against the requisitionists’ opacity, and has pointed out that transparency and willingness to engage with minority shareholders will earn goodwill.
The recent developments at Protasco, which calls itself an infrastructure development provider, take us to the other extreme, and it’s equally troubling and frustrating. Here, the problem is not that the principal players are not saying anything. On the contrary, a lot of information is flowing out from both sides, directly and openly or otherwise, but there are so many allegations and counter-allegations of wrongdoings that the minority shareholders can’t be expected to make confident conclusions as to whom they should back.
Lawsuits have been initiated and the saga will probably drag on for many months at least. The EGMs are by no means the final battles, but they’re important because a board seat is a valuable vantage point.
The EGMs are lawful as long as they’re convened and conducted according to the Companies Act’s provisions and the company rules. However, there’s more happening now than those meetings. The brawl has spilled over into the media and the blogosphere, and one wonders how much of this fits the requirement for “full, accurate and timely disclosure”.
Also, there’s little indication that the regulators are at hand to prevent things from going too far. Bursa Malaysia and the Securities Commission may prefer the quiet and subtle way of delivering warnings and gathering facts, but they should also recognise that the unusual events at Protasco offer them a unique opportunity to draw the line between disclosure and negative campaigning. When there’s plenty of mudslinging going on, nobody walks away spotless.
I think this is one of those moments that the regulators and the independent directors of Protasco should step up their game. Sometimes working behind the scene is possible (and may be even preferable), but not in the above case. I think actually a lot of the problems could have been avoided if regulators and/or independent directors had been more active in the first quarter of 2013, almost two years ago. If they had asked the right questions and done independent research then a lot of information would have been gathered.
Please use Google and the keywords "protasco board tussle" to find the many blogs about this case.
"Executive editor Errol Oh is only sure that Chong and Tey can’t both be right."
Correct, and I don't even exclude the possibility that both sides are (at least to some extent) wrong.
The proposed acquisition was always announced as a "non related party transaction" even as recent as August 5, 2014 :
I strongly doubt that was the case.
Monday, 17 November 2014
Protasco: "Right to be heard"
Note: the blog "Right to be Heard" seems to be deleted.
I received an anonymous tip about a website with more information about Protasco's matters. The website can be found here.
Two interesting postings can be found which might contain original documents:
I can't vouch that these scans are from real documents, but it seems interesting enough to provide the links to these articles. Especially the first document, which contains a lot of new information, at least to me.
Even if the documents are real, there might be more documents, and some might even cancel the agreements in the above links. I am pretty sure that in due course more information will be revealed, by the parties involved.
For people who want to trade in Protasco shares: buyers and sellers beware.
I received an anonymous tip about a website with more information about Protasco's matters. The website can be found here.
Two interesting postings can be found which might contain original documents:
- Agreement 1, allegedly signed on November 3, 2012;
- Agreement 2, allegedly signed on June 28, 2013, the supplemental Sales and Purchase agreement.
I can't vouch that these scans are from real documents, but it seems interesting enough to provide the links to these articles. Especially the first document, which contains a lot of new information, at least to me.
Even if the documents are real, there might be more documents, and some might even cancel the agreements in the above links. I am pretty sure that in due course more information will be revealed, by the parties involved.
For people who want to trade in Protasco shares: buyers and sellers beware.
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:
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.
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?
- ..... 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.
Wednesday, 29 October 2014
Protasco's Puzzling Purchase (12)
According to this article in The Edge Markets:
.... managing director, Datuk Seri Chong Ket Pen has issued a statement to deny allegations in a legal suit started by Kingdom Seekers Venture Sdn Bhd, a firm controlled by Tey Por Yee.
“Clearly, this new proceedings amounts to nothing more than an attempt to smear and tarnish my reputation, apart from seeking to divert attention away from the earlier on-ongoing legal proceedings filed by Protasco Bhd against Tey and others,” Chong said in a joint press statement.
Chong added that he has appointed solicitors to “vigorously defend” the suit against the civil suit and will lodge a police report in respect of those allegations.
.... managing director, Datuk Seri Chong Ket Pen has issued a statement to deny allegations in a legal suit started by Kingdom Seekers Venture Sdn Bhd, a firm controlled by Tey Por Yee.
“Clearly, this new proceedings amounts to nothing more than an attempt to smear and tarnish my reputation, apart from seeking to divert attention away from the earlier on-ongoing legal proceedings filed by Protasco Bhd against Tey and others,” Chong said in a joint press statement.
Chong added that he has appointed solicitors to “vigorously defend” the suit against the civil suit and will lodge a police report in respect of those allegations.
Tuesday, 28 October 2014
Protasco's Puzzling Purchase (11)
The saga that started about 22 months ago continues to intrigue, a new announcement:
Protasco Berhad (“Protasco” / the “Company”) wishes to announce that it has today been served with a Writ of Summons by Kingdom Seekers Ventures Sdn Bhd (“Kingdom Seekers”) suing in a representative capacity for and on behalf of the Company and or for the benefit of the Company. Kingdom Seekers is suing Dato’ Sri Chong Ket Pen, Kenny Chong Ther Nen, Low Kian Seng, Edward Khoo Mong Wei, Lim Yew Ting and RS Maha Niaga Sdn Bhd. The Company is named as a Defendant by virtue of the representative claim. Kingdom Seekers is a company controlled by one of Protasco’s director, namely Mr Tey Por Yee and is a substantial shareholder of the Company. The Company had on 22nd September 2014 commenced a suit against inter alia Mr Tey Por Yee for breach of his fiduciary and statutory duties.
Kingdom Seekers’ claims against Dato’ Sri Chong Ket Pen, Kenny Chong Ther Nen, Low Kian Seng, Edward Khoo Mong Wei, Lim Yew Ting, RS Maha Niaga Sdn Bhd is for the return of a sum of RM10 million to the Company and general damages purportedly suffered by the Company.
In this regard, the Company has appointed a firm of solicitors to represent the Company and oppose the foregoing suit. The Company wish to state that the suit filed by Kingdom Seekers have no significant immediate adverse effect on the current financial position of Protasco.
Tey gave a press conference with more detailed information, for instance the following map of the money trail:
After almost two years, bystanders are getting more and more information, which is always the case when two parties engage in a mud slinging contest and/or are threatening with court cases.
But there are still many questions that I posed almost two years ago that are unanswered as of now.
The most obvious one: who were the shareholders and directors of Anglo Slavic Petrogas Ltd, the seller?
We will have to wait how the company will respond to these allegations. Eventually it might be the work for the judges and authorities to find out the facts and the possible wrongdoings.
Protasco Berhad (“Protasco” / the “Company”) wishes to announce that it has today been served with a Writ of Summons by Kingdom Seekers Ventures Sdn Bhd (“Kingdom Seekers”) suing in a representative capacity for and on behalf of the Company and or for the benefit of the Company. Kingdom Seekers is suing Dato’ Sri Chong Ket Pen, Kenny Chong Ther Nen, Low Kian Seng, Edward Khoo Mong Wei, Lim Yew Ting and RS Maha Niaga Sdn Bhd. The Company is named as a Defendant by virtue of the representative claim. Kingdom Seekers is a company controlled by one of Protasco’s director, namely Mr Tey Por Yee and is a substantial shareholder of the Company. The Company had on 22nd September 2014 commenced a suit against inter alia Mr Tey Por Yee for breach of his fiduciary and statutory duties.
Kingdom Seekers’ claims against Dato’ Sri Chong Ket Pen, Kenny Chong Ther Nen, Low Kian Seng, Edward Khoo Mong Wei, Lim Yew Ting, RS Maha Niaga Sdn Bhd is for the return of a sum of RM10 million to the Company and general damages purportedly suffered by the Company.
In this regard, the Company has appointed a firm of solicitors to represent the Company and oppose the foregoing suit. The Company wish to state that the suit filed by Kingdom Seekers have no significant immediate adverse effect on the current financial position of Protasco.
Tey gave a press conference with more detailed information, for instance the following map of the money trail:
After almost two years, bystanders are getting more and more information, which is always the case when two parties engage in a mud slinging contest and/or are threatening with court cases.
But there are still many questions that I posed almost two years ago that are unanswered as of now.
The most obvious one: who were the shareholders and directors of Anglo Slavic Petrogas Ltd, the seller?
We will have to wait how the company will respond to these allegations. Eventually it might be the work for the judges and authorities to find out the facts and the possible wrongdoings.
Monday, 27 October 2014
Protasco's Puzzling Purchase (10)
As expected, but a bit belated, Protasco made the following announcement:
Protasco Berhad (“the Company”) wishes to announce that the Company has on 27 October 2014 received a Special Notice from shareholders of the Company, collectively holding approximately 10.51% of the issued and paid-up capital of the Company, notifying of their Proposal to move ordinary resolutions at an extraordinary general meeting of the Company to remove certain directors namely Tey Por Yee and Ooi Kock Aun. A copy of the Special Notice is attached herewith.
Protasco Berhad (“the Company”) wishes to announce that the Company has on 27 October 2014 received a Special Notice from shareholders of the Company, collectively holding approximately 10.51% of the issued and paid-up capital of the Company, notifying of their Proposal to move ordinary resolutions at an extraordinary general meeting of the Company to remove certain directors namely Tey Por Yee and Ooi Kock Aun. A copy of the Special Notice is attached herewith.
Friday, 17 October 2014
Protasco's Puzzling Purchase (9)
Article in The Star: "Two Protasco non-exec directors deny allegations".
"Protasco Bhd non-executive directors Tey Por Yee and Ooi Kock Aun have denied all allegations made against them by the company and will file their defence at the end of this month."
“We have carried out our fiduciary and statutory duties to the best of our ability. We resolutely deny all these allegations. “The allegations are not true and not supported by facts. These will be made apparent when we file our defence at the end of this month, where proof will be furnished to back our defence.”
It was about time that they finally broke their silence. Hopefully we will see a healthy dose of transparency in this rather intriguing case, and the veil will be lifted on many aspects of this case. For instance, who was really behind PT Anglo Slavic Utama?
"Protasco Bhd non-executive directors Tey Por Yee and Ooi Kock Aun have denied all allegations made against them by the company and will file their defence at the end of this month."
“We have carried out our fiduciary and statutory duties to the best of our ability. We resolutely deny all these allegations. “The allegations are not true and not supported by facts. These will be made apparent when we file our defence at the end of this month, where proof will be furnished to back our defence.”
It was about time that they finally broke their silence. Hopefully we will see a healthy dose of transparency in this rather intriguing case, and the veil will be lifted on many aspects of this case. For instance, who was really behind PT Anglo Slavic Utama?
Friday, 10 October 2014
Protasco's Puzzling Purchase (8)
A new, not completely unexpected, twist in this saga, from The Star website:
Protasco lodges police report against Tey and Ooi over aborted Indonesia O&G deal
Things have taken a turn for the worse between Protasco Bhd and Tey Por Yee with the former lodging a police report over an aborted oil and gas deal on an asset in Indonesia.
Protasco, a construction and property outfit, said in a filing with Bursa Malaysia yesterday that it had lodged a police report against Tey and Ooi Kock Aun – both directors at oil and gas firm PT Anglo Slavic Utama (ASU) following its recent filing of a civil claim against both individuals.
The latest development has put a strain on the relationship between Protasco and Tey who established a partnership in December 2012.
At that time, Protasco had entered into a sale and purchase agreement (SPA) with ASU to buy 76% of its unit PT Anglo Slavic Indonesia (ASI) for US$55mil (about RM180mil).
I assume that Bursa and/or the Securities Commission are on the case as well.
Protasco lodges police report against Tey and Ooi over aborted Indonesia O&G deal
Things have taken a turn for the worse between Protasco Bhd and Tey Por Yee with the former lodging a police report over an aborted oil and gas deal on an asset in Indonesia.
Protasco, a construction and property outfit, said in a filing with Bursa Malaysia yesterday that it had lodged a police report against Tey and Ooi Kock Aun – both directors at oil and gas firm PT Anglo Slavic Utama (ASU) following its recent filing of a civil claim against both individuals.
The latest development has put a strain on the relationship between Protasco and Tey who established a partnership in December 2012.
At that time, Protasco had entered into a sale and purchase agreement (SPA) with ASU to buy 76% of its unit PT Anglo Slavic Indonesia (ASI) for US$55mil (about RM180mil).
I assume that Bursa and/or the Securities Commission are on the case as well.
Sunday, 28 September 2014
Protasco's Puzzling Purchase (7)
Three independent directors of Nexgram resigned according to announcements on the Bursa website (here, here and here).
The three directors were unanimous in their reason to resign:
"Because of the newspaper report on Protasco Berhad filing legal suit against a director of the Company."
Quite remarkable to give a development in another company as the reason for ones resignation.
The Star published an interesting article regarding this same matter: "More than meets the eye".
"The resignation of three Nexgram Holdings Bhd directors, following a suit by Protasco Bhd against Nexgram founder Tey Por Yee, has raised some eyebrows within industry circles. Observers are questioning the reasons for the directors resigning from Nexgram right away following the suit. The directors in question are Leou Thiam Lai, Ungku Razak Ungku Rahman and Yap Siok Teng. Nexgram, in announcing their resignations to Bursa Malaysia, said that they had resigned “because of the newspaper report on Protasco filing a legal suit against a director of the company”. It, however, did not elaborate. Questions are being raised as to whether there is something else brewing in Nexgram which caused this succession of events."
For the time being it seems Nexgram is "rather light" on independent directors. That however didn't stop the company (listed on the ACE market) from making another announcement, from The Star again:
"Nexgram, which started off as a mobile applications and platform provider, said the proposed acquisition would allow it to “participate in Fiji’s economic development and growth process, which is still currently in the early stages of development” and that the proposed deal would be financed by a combination of internal funds and/or bank borrowings."
I don't immediately see the synergy between a Malaysian based tech company and a Fiji based developer.
Regarding Protasco, an interesting situation seems to be that the company is not taking any steps to remove Tey Por Yee and Ooi Kock Aun as directors, despite filing a legal suit against them for "breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit".
Apparently, both Tey and Ooi are still welcome to stay on as directors of Protasco and to join board meetings.
There is quite an interesting web of connections between Protasco, Nexgram and PT Inovisi Infracom Tbk. To be continued.
The three directors were unanimous in their reason to resign:
"Because of the newspaper report on Protasco Berhad filing legal suit against a director of the Company."
Quite remarkable to give a development in another company as the reason for ones resignation.
The Star published an interesting article regarding this same matter: "More than meets the eye".
"The resignation of three Nexgram Holdings Bhd directors, following a suit by Protasco Bhd against Nexgram founder Tey Por Yee, has raised some eyebrows within industry circles. Observers are questioning the reasons for the directors resigning from Nexgram right away following the suit. The directors in question are Leou Thiam Lai, Ungku Razak Ungku Rahman and Yap Siok Teng. Nexgram, in announcing their resignations to Bursa Malaysia, said that they had resigned “because of the newspaper report on Protasco filing a legal suit against a director of the company”. It, however, did not elaborate. Questions are being raised as to whether there is something else brewing in Nexgram which caused this succession of events."
For the time being it seems Nexgram is "rather light" on independent directors. That however didn't stop the company (listed on the ACE market) from making another announcement, from The Star again:
"Nexgram, which started off as a mobile applications and platform provider, said the proposed acquisition would allow it to “participate in Fiji’s economic development and growth process, which is still currently in the early stages of development” and that the proposed deal would be financed by a combination of internal funds and/or bank borrowings."
I don't immediately see the synergy between a Malaysian based tech company and a Fiji based developer.
Regarding Protasco, an interesting situation seems to be that the company is not taking any steps to remove Tey Por Yee and Ooi Kock Aun as directors, despite filing a legal suit against them for "breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit".
Apparently, both Tey and Ooi are still welcome to stay on as directors of Protasco and to join board meetings.
There is quite an interesting web of connections between Protasco, Nexgram and PT Inovisi Infracom Tbk. To be continued.
Wednesday, 24 September 2014
Protasco's Puzzling Purchase (6)
Protasco further announced the following details:
Total amount of claims against the defendants
Against the 1st Defendant
- A payment of USD22 million;
- Pre-judgment interest on USD22 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
- Post judgment interest on USD22 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum; and
- Damages for the breach of the Restated SPA.
Against the 2nd and 3rd Defendants
- A payment of USD27 million;
- Pre-judgment interest on USD27 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
- Post judgment interest on USD27 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum;
- Damages for fraud and conspiracy; and
- General damages, aggravated and exemplary.
Protasco must have filed their version of the chain of events related to the mysterious purchase with the court. These documents (and the possible articles the defence might produce) must contain many interesting details that are still unknown to many at this moment.
Except for this court case, the big question is if the authorities should take further action. The severity of the alleged events seems to suggest that they might have to look into that.
Total amount of claims against the defendants
Against the 1st Defendant
- A payment of USD22 million;
- Pre-judgment interest on USD22 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
- Post judgment interest on USD22 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum; and
- Damages for the breach of the Restated SPA.
Against the 2nd and 3rd Defendants
- A payment of USD27 million;
- Pre-judgment interest on USD27 million pursuant to Section 11 of the Civil Law Act 1956 from the date of the Writ of Summons until the date of judgment at an interest rate of 5% per annum;
- Post judgment interest on USD27 million pursuant to Order 42 Rule 12 of the Rules of Court 2012 from the date of judgment till full and final settlement thereof at an interest rate of 5% per annum;
- Damages for fraud and conspiracy; and
- General damages, aggravated and exemplary.
Protasco must have filed their version of the chain of events related to the mysterious purchase with the court. These documents (and the possible articles the defence might produce) must contain many interesting details that are still unknown to many at this moment.
Except for this court case, the big question is if the authorities should take further action. The severity of the alleged events seems to suggest that they might have to look into that.
Monday, 22 September 2014
Protasco's Puzzling Purchase (5)
A pretty shocking (albeit not unexpected, at least for this blogger) announcement by Protasco:
Protasco Berhad (“Protasco” ) wishes to announce that Protasco has today filed a legal suit at the Kuala Lumpur High Court against PT Anglo Slavic Utama (“1st Defendant”) and two of its directors, namely Tey Por Yee (“2nd Defendant”) and Ooi Kock Aun (“3rd Defendant”) (“Legal Proceeding”).
Protasco’s claim against the 1st Defendant is for the refund of the Purchase Price paid under the Restated SPA dated 28 January 2014 and/or damages and/or for damages arising from the breach of contract. Apart from the Restated SPA being void, and as a further or alternative claim, as the Conditions Subsequent were not fulfilled within the Condition Period, Protasco proceeded to terminate the Restated SPA and demanded for the return of the Purchase Price from the 1st Defendant vide its letter dated 4 August 2014.
Protasco’s claim against the 2nd Defendant and the 3rd Defendant is premised on the breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit. Protasco is seeking damages against the 2nd Defendant and the 3rd Defendant.
Protasco wishes to state that the Legal Proceeding it has initiated has no significant immediate adverse impact on the current financial position of Protasco. Protasco will make impairment on the Purchase Price if necessary in consultation with its Auditors.
I wrote many times about Protasco and the rather strange proposed acquisition of the Indonesian oil & gas company which didn't seem to make much sense at all (at least to me), most notably here, here, here and here.
Thanks (of course) to the (anonymous) person who drew my attention to this interesting case in the first place. Keep the good comments coming!
Protasco Berhad (“Protasco” ) wishes to announce that Protasco has today filed a legal suit at the Kuala Lumpur High Court against PT Anglo Slavic Utama (“1st Defendant”) and two of its directors, namely Tey Por Yee (“2nd Defendant”) and Ooi Kock Aun (“3rd Defendant”) (“Legal Proceeding”).
Protasco’s claim against the 1st Defendant is for the refund of the Purchase Price paid under the Restated SPA dated 28 January 2014 and/or damages and/or for damages arising from the breach of contract. Apart from the Restated SPA being void, and as a further or alternative claim, as the Conditions Subsequent were not fulfilled within the Condition Period, Protasco proceeded to terminate the Restated SPA and demanded for the return of the Purchase Price from the 1st Defendant vide its letter dated 4 August 2014.
Protasco’s claim against the 2nd Defendant and the 3rd Defendant is premised on the breach of their fiduciary and statutory duties including the duty to disclose their interest in the transaction, conspiracy to defraud Protasco and the making of secret profit. Protasco is seeking damages against the 2nd Defendant and the 3rd Defendant.
Protasco wishes to state that the Legal Proceeding it has initiated has no significant immediate adverse impact on the current financial position of Protasco. Protasco will make impairment on the Purchase Price if necessary in consultation with its Auditors.
I wrote many times about Protasco and the rather strange proposed acquisition of the Indonesian oil & gas company which didn't seem to make much sense at all (at least to me), most notably here, here, here and here.
Thanks (of course) to the (anonymous) person who drew my attention to this interesting case in the first place. Keep the good comments coming!
Tuesday, 5 August 2014
Protasco's Puzzling Purchase (4)
I wrote many times rather critical about Protasco's puzzling purchase, for instance here, here, here and here.
Today the company announced the following:
Reference is made to the Company’s announcements dated 30 January 2014, 10 February 2014 and 25 July 2014 (“Announcements”). Unless otherwise stated, defined terms in this announcement shall carry the same meanings as defined in the Announcements.
Protasco Berhad (“Protasco” or “Company”) wishes to announce that the Conditions Subsequent pursuant to Restated SPA have not been fulfilled by the Vendor and the security provider within the Condition Period and accordingly, the Restated SPA lapsed on 28 July 2014. Protasco is in discussion with the Vendor for the Purchase Price to be returned via, amongst others:-
(a) cash;
(b) disposal of the Secured Shares;
in accordance with the terms of the Restated SPA.
I think that in it self is good news for Protasco's shareholders, I never believed in this deal anyhow, with so many red flags and so little transparency.
However, before minority shareholders start to celebrate, the Vendors first have to return the deposit.
I hope Protasco simply gets back its cash, as soon as possible.
Shall we ever know who the people are behind the Vendor? Time will tell.
Today the company announced the following:
Reference is made to the Company’s announcements dated 30 January 2014, 10 February 2014 and 25 July 2014 (“Announcements”). Unless otherwise stated, defined terms in this announcement shall carry the same meanings as defined in the Announcements.
Protasco Berhad (“Protasco” or “Company”) wishes to announce that the Conditions Subsequent pursuant to Restated SPA have not been fulfilled by the Vendor and the security provider within the Condition Period and accordingly, the Restated SPA lapsed on 28 July 2014. Protasco is in discussion with the Vendor for the Purchase Price to be returned via, amongst others:-
(a) cash;
(b) disposal of the Secured Shares;
in accordance with the terms of the Restated SPA.
I think that in it self is good news for Protasco's shareholders, I never believed in this deal anyhow, with so many red flags and so little transparency.
However, before minority shareholders start to celebrate, the Vendors first have to return the deposit.
I hope Protasco simply gets back its cash, as soon as possible.
Shall we ever know who the people are behind the Vendor? Time will tell.
Thursday, 13 February 2014
Protasco's Puzzling Purchase (3)
I wrote in my previous posting about "Protasco's Puzzling Purchase":
"There still is hardly any transparency at all".
Protasco was simply begging Bursa to be queried, and Bursa "happily" complied, issuing a list of 21 (excellent) questions.
As far as I remember, by far the longest list of questions I have ever seen from Bursa (and I must have read hundreds of them). But may be that was Protasco's intention all the time, to be admitted to the Malaysian Guiness Book of Records.
Protasco did answer all questions, revealing lots of new information.
I will cherry pick some of it (I recommend shareholders of Protasco to read the whole document):
Question 2: why the valuation is so much lower than in the initial S&P agreement
"The purchase consideration of USD55 million under the Original SPA was derived at based on the Vendor’s valuation of the KST Field and taking into consideration Protasco’s effective interests in PT Haseba of 50.5%."
To just take over the vendors valuation sounds rather naïve to me, surely the vendor is interested to get as high a price as possible?
Question 3: Basis and justification for Protasco to enter into the Restated SPA as it is noted that Due Diligence in still on going
"The Board has decided to proceed with the Restated SPA to enable Protasco to take control of PT ASI, so that PT ASI can commence with the exploration, well re-activation and/or construction of the well (if required) in accordance with an agreed development plan approved by Pertamina. The development plan is an integral part of the PMPA extension and/or other similar agreement by Pertamina to extend the PMPA beyond its expiry on 14th December 2014 for the Extension."
It looks like there is currently not enough money in PT ASI to commence activities, and PERTAMINA needs to see development going on. That is why the deal now is pushed through. Protasco will provide a loan of USD 5 Million for this purpose.
Question 7: To disclose basis and justification (including bases and assumption) in arriving at the valuation of USD35 million
"The valuation of USD33.3 million in KST Field by KPMG, Singapore is arrived at using the income approach [discounted cash flow method (“DCF”)]. In arriving at the valuation, the following bases and assumptions are used:"
And then a long list of assumptions is mentioned, a list that can easily be expanded on. The problem with DCF is that changes in a single assumption can cause quite large changes in the outcome, changes in a few assumptions will render the valuation basically useless. DCF might be useful in calculating the value of a bond, or of a toll highway with predictable traffic, but it is completely unsuitable to calculate the valuation of a junior energy play like PT ASI.
Question 10: Detailed information on KST Field
"(d) PT Haseba is entitled to USD32.39/bbl for every barrel received at sales point when the Indonesia Crude Price (“ICP”) is over USD100/bbl"
As far as I can see, the USD 32.39 is a fixed amount, this would hugely limit the upside potential, shareholders of Protasco should take notice.
Question 14: Information on PT Inovisi Infracom TBK (“PT Inovisi”)
"The substantial shareholder [of PT Inovisi] is PT Green Pine, holding 60.2% equity interest in PT Inovisi. PT Green Pine has business relationship with the Vendor [of PT ASI]"
What does "business relationship" mean? Do they infrequently do some trading or are the major shareholders substantially the same? I guess more towards the latter. Protasco has not been forthcoming at all about information regarding the seller (which is ultimately owned by a BVI registered company).
Question 19: Statement by Protasco
"Protasco, after considering the report by KPMG and barring unforeseen circumstances, is of the opinion that the Profit Guarantee is realistic."
For the sake of the shareholders of Protasco I definitely hope they are right, but I have strong doubts. This year for instance the company would need to make USD 2M, but the year has already started and there will be lots of initial start-up costs involved. PT ATI's track record so far also does not give any indication that the profit guarantee can be met.
If this deal is really that good, why did the seller (most likely based in Indonesia and having deep knowledge of the oil & gas industry) offer it to Protasco (based in Malaysia and with no experience in the oil & gas industry). The seller could simply have placed the PT Inovisi shares with a bank, borrowed money against it, and (re-)started the wells themselves and reap 100% of the profits.
If a deal sounds too good too be true, it often is too good to be true.
"There still is hardly any transparency at all".
Protasco was simply begging Bursa to be queried, and Bursa "happily" complied, issuing a list of 21 (excellent) questions.
As far as I remember, by far the longest list of questions I have ever seen from Bursa (and I must have read hundreds of them). But may be that was Protasco's intention all the time, to be admitted to the Malaysian Guiness Book of Records.
Protasco did answer all questions, revealing lots of new information.
I will cherry pick some of it (I recommend shareholders of Protasco to read the whole document):
Question 2: why the valuation is so much lower than in the initial S&P agreement
"The purchase consideration of USD55 million under the Original SPA was derived at based on the Vendor’s valuation of the KST Field and taking into consideration Protasco’s effective interests in PT Haseba of 50.5%."
To just take over the vendors valuation sounds rather naïve to me, surely the vendor is interested to get as high a price as possible?
Question 3: Basis and justification for Protasco to enter into the Restated SPA as it is noted that Due Diligence in still on going
"The Board has decided to proceed with the Restated SPA to enable Protasco to take control of PT ASI, so that PT ASI can commence with the exploration, well re-activation and/or construction of the well (if required) in accordance with an agreed development plan approved by Pertamina. The development plan is an integral part of the PMPA extension and/or other similar agreement by Pertamina to extend the PMPA beyond its expiry on 14th December 2014 for the Extension."
It looks like there is currently not enough money in PT ASI to commence activities, and PERTAMINA needs to see development going on. That is why the deal now is pushed through. Protasco will provide a loan of USD 5 Million for this purpose.
Question 7: To disclose basis and justification (including bases and assumption) in arriving at the valuation of USD35 million
"The valuation of USD33.3 million in KST Field by KPMG, Singapore is arrived at using the income approach [discounted cash flow method (“DCF”)]. In arriving at the valuation, the following bases and assumptions are used:"
And then a long list of assumptions is mentioned, a list that can easily be expanded on. The problem with DCF is that changes in a single assumption can cause quite large changes in the outcome, changes in a few assumptions will render the valuation basically useless. DCF might be useful in calculating the value of a bond, or of a toll highway with predictable traffic, but it is completely unsuitable to calculate the valuation of a junior energy play like PT ASI.
Question 10: Detailed information on KST Field
"(d) PT Haseba is entitled to USD32.39/bbl for every barrel received at sales point when the Indonesia Crude Price (“ICP”) is over USD100/bbl"
As far as I can see, the USD 32.39 is a fixed amount, this would hugely limit the upside potential, shareholders of Protasco should take notice.
Question 14: Information on PT Inovisi Infracom TBK (“PT Inovisi”)
"The substantial shareholder [of PT Inovisi] is PT Green Pine, holding 60.2% equity interest in PT Inovisi. PT Green Pine has business relationship with the Vendor [of PT ASI]"
What does "business relationship" mean? Do they infrequently do some trading or are the major shareholders substantially the same? I guess more towards the latter. Protasco has not been forthcoming at all about information regarding the seller (which is ultimately owned by a BVI registered company).
Question 19: Statement by Protasco
"Protasco, after considering the report by KPMG and barring unforeseen circumstances, is of the opinion that the Profit Guarantee is realistic."
For the sake of the shareholders of Protasco I definitely hope they are right, but I have strong doubts. This year for instance the company would need to make USD 2M, but the year has already started and there will be lots of initial start-up costs involved. PT ATI's track record so far also does not give any indication that the profit guarantee can be met.
If this deal is really that good, why did the seller (most likely based in Indonesia and having deep knowledge of the oil & gas industry) offer it to Protasco (based in Malaysia and with no experience in the oil & gas industry). The seller could simply have placed the PT Inovisi shares with a bank, borrowed money against it, and (re-)started the wells themselves and reap 100% of the profits.
If a deal sounds too good too be true, it often is too good to be true.
Sunday, 2 February 2014
Protasco's Puzzling Purchase (2)
I wrote before about Protasco's proposed deal to buy into an Indonesian oil & gas company, a rather strange deal since Protasco has no relevant industry experience in this field.
The company just announced that it has entered in an amended Sales and Purchase Agreement, 13 months after the initial announcement. Was the first announcement made during the Christmas holiday, this time it was made on the evening of the CNY family reunion diner. Interesting timing indeed.
The deal in short (all PT companies are Indonesian based):
The old deal (28 December 2012): Protasco buys 76% of PT ASI for USD 55M, with a USD 55M profit guarantee (spread out over 4 years). This deal values PT ASI at USD 72M.
The new deal (29 January 2014): Protasco buys 63% of PT ASI for USD 22M, with a USD 22M profit guarantee (spread out over 4 years). The deal values PT ASI at USD 35M.
It seems that the value of PT ASI suddenly has halved while the profit guarantee is down a whopping 60%! No reason is given for the much lower profit guarantee, puzzling.
PT ASI's net assets are only USD 9M. The valuation (about 4 times net assets) is done by KPMG based on the DCF (Discounted Cash Flow) model.
I think this tool is completely unsuitable (I wrote before about this) to calculate the valuation for a junior oil & gas company, due to the enormous uncertainties, for instance:
There is still no approval to extend the partnership agreement that expires on December 2014 for another 10 years. The extension is however a condition for the deal to go through.
There still is hardly any transparency at all, for instance:
Bad news is that the amount of money to be invested and loaned represents 24% of Protasco's net assets, and since this is less than 25% the company doesn't need shareholders approval nor does it need to appoint an adviser. Is it by chance that the percentage is just below the threshold?
An anonymous person pointed at the possible role that Adrian Ooi Kock Aun plays in the deal, he was appointed to the board of Protasco just before the deal was announced December 2012. He is the CFO of PT Inovisi Infracom Tbk, an Indonesian listed company that also invests in oil & gas. The guarantees that are given out are based on a large block of shares of PT Inovisi Infracom Tbk. Surely Adrian Ooi must be aware of the identity of this large shareholder who is most likely the person/company behind Anglo Slavic Petrogas, the seller. Should this information not be made public?
The company just announced that it has entered in an amended Sales and Purchase Agreement, 13 months after the initial announcement. Was the first announcement made during the Christmas holiday, this time it was made on the evening of the CNY family reunion diner. Interesting timing indeed.
The deal in short (all PT companies are Indonesian based):
- Anglo Slavic Petrogas, a BVI based company, owns 100% of PT ASU
- PT ASU owns 100% of PT ASI
- PT ASI owns 95% of PT FAS, an oil & gas exploration company
- PT FAS owns 70% of PT Haseba
- PT Haseba has the rights to KST Field
The old deal (28 December 2012): Protasco buys 76% of PT ASI for USD 55M, with a USD 55M profit guarantee (spread out over 4 years). This deal values PT ASI at USD 72M.
The new deal (29 January 2014): Protasco buys 63% of PT ASI for USD 22M, with a USD 22M profit guarantee (spread out over 4 years). The deal values PT ASI at USD 35M.
It seems that the value of PT ASI suddenly has halved while the profit guarantee is down a whopping 60%! No reason is given for the much lower profit guarantee, puzzling.
PT ASI's net assets are only USD 9M. The valuation (about 4 times net assets) is done by KPMG based on the DCF (Discounted Cash Flow) model.
I think this tool is completely unsuitable (I wrote before about this) to calculate the valuation for a junior oil & gas company, due to the enormous uncertainties, for instance:
- The prices of oil and gas, fluctuating a lot
- Exchange price between different currencies
- Cost of exploration, often projects are more expensive and take longer than planned
- The exact amount of reserves available and the economic viability to extract them
- The possibilities of disasters, either caused by men (oil spills etc.) or by nature (the field is near an earthquake prone area)
- Possible changes in the conditions of the concession or in the tax rate (happen quite often, especially if profit is good and the government changes)
- High corruption and low corporate governance standards and enforcement in Indonesia (for instance compared to Malaysia)
There is still no approval to extend the partnership agreement that expires on December 2014 for another 10 years. The extension is however a condition for the deal to go through.
There still is hardly any transparency at all, for instance:
- Who is behind the BVI based seller Anglo Slavic Petrogas?
- What are the expected extraction rates and what are the oil & gas reserves of the KST Field?
- Why was the exploration of KST Field stopped in the past? In 2011 revenue of PT Haseba was zero
- Is there any middlemen, is any commission paid for this deal?
- Who owns the other 30% of PT Haseba?
- What did PT ASI pay to own 95% of PT FAS?
- Protasco will make an advance of another USD 5 Million to be used for exploration, how much are the other companies (PT ASU, the other shareholders of PT Haseba) contributing?
Bad news is that the amount of money to be invested and loaned represents 24% of Protasco's net assets, and since this is less than 25% the company doesn't need shareholders approval nor does it need to appoint an adviser. Is it by chance that the percentage is just below the threshold?
An anonymous person pointed at the possible role that Adrian Ooi Kock Aun plays in the deal, he was appointed to the board of Protasco just before the deal was announced December 2012. He is the CFO of PT Inovisi Infracom Tbk, an Indonesian listed company that also invests in oil & gas. The guarantees that are given out are based on a large block of shares of PT Inovisi Infracom Tbk. Surely Adrian Ooi must be aware of the identity of this large shareholder who is most likely the person/company behind Anglo Slavic Petrogas, the seller. Should this information not be made public?
Wednesday, 25 December 2013
No XMas present for Hibiscus shareholders
Hibiscus Petroleum announced yesterday its findings regarding the first oil well:
I have written in the past in cautious terms about SPACs and Hibiscus, I think many investors who rushed to buy its shares went over their head in expectations. The oil & gas industry is a hit and miss industry, with much more "misses" than "hits". Fortunes have been made, but also been lost, many well known entrepreneurs have tried it and failed.
The above drilling result does not mean the end for Hibiscus, but it does put things in perspective. Expectations were high, very high, probably too high, also partly fuelled by the company itself:
"The prospect MNN #1, which is about 1,000 metres in depth, was selected for drilling after in-depth technical evaluation and verification using the proprietary Rex Virtual Drilling technology, in addition to confirmations provided via conventional methodologies."
And before the company wrote this about their Rex technology:
"MalaysiaFinance" wrote about the possibility of insider trading, which does indeed look worrisome, hopefully the authorities will investigate in depth.
I would like to draw the attention of the readers to the rather peculiar timing of the events, announcing the results during the holidays, when most likely authorities and fund managers etc. are on holiday.
We saw the same happening to Protasco's Puzzling Purchase which was announced during the Christmas break. It is one of the strangest corporate proposals in Malaysia in the last ten years that somehow or the other was done just before the year end. Despite expectations raised by the company that the deal would be wrapped up in a short time, now, one whole year later, minority shareholders are still left in the dark.
Returning to Hibiscus, the company has booked operational losses so far in its history, which in itself is not such a surprise, given its short existence and the long lead time to earn real revenue.
It was able to book a paper profit due to the following corporate exercise:
Hibiscus Petroleum Bhd said a corporate investor, Palladium Fund Management Inc has acquired a 15% stake in its joint venture company Hirex Petroleum Sdn Bhd via a US$10 million (RM31.5 million) investment.
"The subscription is expected to provide Hirex with sufficient working capital to fund its other operational costs for the next two years,'' it said in a filing with Bursa Malaysia yesterday.
Palladium's entry is expected to result in an increase in the proforma earnings of Hibiscus for the financial year ending March 31, 2014 by RM12.6 million, or 4.2 sen a share.
"The increase earnings is mainly derived from the one-off gain arising from the dilution in Hibiscus' equity interest in Hirex from 48.24% to 41%,'' Hibiscus said.
The strange thing is that searches on "Triax Ventures Corp" and "Palladium Fund Management" do not reveal any information at all about these companies. Which is rather speculiar for a company engaged in fund management in the age of the internet.
- Mud losses in two carbonate sections of the well prevented Masirah Oil Limited from reaching its planned target depth.
- Data analysis indicated presence of non-commercial hydrocarbons.
I have written in the past in cautious terms about SPACs and Hibiscus, I think many investors who rushed to buy its shares went over their head in expectations. The oil & gas industry is a hit and miss industry, with much more "misses" than "hits". Fortunes have been made, but also been lost, many well known entrepreneurs have tried it and failed.
The above drilling result does not mean the end for Hibiscus, but it does put things in perspective. Expectations were high, very high, probably too high, also partly fuelled by the company itself:
"The prospect MNN #1, which is about 1,000 metres in depth, was selected for drilling after in-depth technical evaluation and verification using the proprietary Rex Virtual Drilling technology, in addition to confirmations provided via conventional methodologies."
And before the company wrote this about their Rex technology:
- "significantly increases the chances of success in drilling for oil and gas"
- "repeatedly and accurately predicted the presence or absence of oil without physically drilling a well"
- "in eight 'blind' tests .... the technology was successful in all cases".
"MalaysiaFinance" wrote about the possibility of insider trading, which does indeed look worrisome, hopefully the authorities will investigate in depth.
I would like to draw the attention of the readers to the rather peculiar timing of the events, announcing the results during the holidays, when most likely authorities and fund managers etc. are on holiday.
We saw the same happening to Protasco's Puzzling Purchase which was announced during the Christmas break. It is one of the strangest corporate proposals in Malaysia in the last ten years that somehow or the other was done just before the year end. Despite expectations raised by the company that the deal would be wrapped up in a short time, now, one whole year later, minority shareholders are still left in the dark.
Returning to Hibiscus, the company has booked operational losses so far in its history, which in itself is not such a surprise, given its short existence and the long lead time to earn real revenue.
It was able to book a paper profit due to the following corporate exercise:
Hibiscus Petroleum Bhd said a corporate investor, Palladium Fund Management Inc has acquired a 15% stake in its joint venture company Hirex Petroleum Sdn Bhd via a US$10 million (RM31.5 million) investment.
"The subscription is expected to provide Hirex with sufficient working capital to fund its other operational costs for the next two years,'' it said in a filing with Bursa Malaysia yesterday.
Palladium's entry is expected to result in an increase in the proforma earnings of Hibiscus for the financial year ending March 31, 2014 by RM12.6 million, or 4.2 sen a share.
"The increase earnings is mainly derived from the one-off gain arising from the dilution in Hibiscus' equity interest in Hirex from 48.24% to 41%,'' Hibiscus said.
The strange thing is that searches on "Triax Ventures Corp" and "Palladium Fund Management" do not reveal any information at all about these companies. Which is rather speculiar for a company engaged in fund management in the age of the internet.
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