Saturday, October 16, 2010

Ferrir Hodgson Found Maxbiz Assets Were Not In Working Condition And Receivables Which Could Not Be Collected!

On Star Business: Ferrier Hodgson’s key findings on Maxbiz probe

  • PETALING JAYA: Messrs Ferrier Hodgson MH Sdn Bhd, which was appointed to investigate the financial irregularities in Maxbiz Corp Bhd’s subsidiaries, has found that the loan stocks Maxbiz issued to Geahin Engineering Bhd’s (GEB) creditors were issued against assets which were not in working condition and receivables which could not have been collected.

    Maxbiz took over the listing status of Geahin in October 2004, after which it issued RM22.6mil redeemable convertible secured loan stocks (RCSLS) and RM3mil redeemable unsecured loan stocks (RULS) to Geahin’s creditors.

    Maxbiz told Bursa Malaysia yesterday that among Ferrier Hodgson’s key findings were that Geahin could not have been an operating cash-generating unit because all plant and machinery against which the RCSLS were issued were either not in working condition or “not sighted.”

    The RULS, meanwhile, were issued against Geahin’s receivables which had already been paid to Geahin or were non-existent.

    “Maxbiz therefore could not have collected the monies to redeem the RULS. Therefore, the RULS which were secured against the receivables of GEB should not have been issued,” Maxbiz said citing the investigative report.

    “There is sufficient evidence to suggest that all the parties concerned had knowledge of these facts and still proceeded with the corporate exercise to issue the said bonds,” it added.

    Maxbiz acquired MKK Industries Sdn Bhd as part of the reverse takeover (RTO) exercise via the issuance of RM53.64mil worth of Maxbiz shares.

    On MKK, Ferrier Hodgson said there had been claims from the Customs, Inland Revenue Board, Intertrad Ltd T/A Sclavos Interna-tional and Thies GmbH and Co.

    The claims by the Customs are for unpaid sales taxes and penalties which appear to have been incurred prior to Feb 4, 2001 and/or between Nov 23 and Oct 7, 2004 – pre-acquisition period of MKK by Maxbiz.

    It said MKK had not been remitting corporation tax since 1997. In addition, MKK has received claims from Intertrad Ltd for outstanding sum of US$926,957.23 and Thies GmbH and Co for 118,557.94 euros, being unsettled balance for the purchase of equipment made in 2000 and 2001 while these equipment appears in the fixed assets lists of MKK as fully paid.

    Mayford Garments Sdn Bhd was acquired by Maxbiz as part of the RTO exercise by the issuance of RM66.59mil of Maxbiz’s shares.

    Mayford was wound up by RHB Bank Bhd in February 2007 for an outstanding loan of RM1.6mil and the machinery of value RM47mil remains unaccounted for.

    Maxbiz said the board was advised by the solicitors not to discuss the above investigations in detail as it might jeopardise the legal actions to be taken against the relevant parties.

Hmmm.... last year, I posted about Maxbiz claims that its assets were 'missing'.

22 July 2009: Honey Did You See My Missing 40 Million Assets?

28 July 2009: Maxbiz: The Dog Ate My Assets!

29 July 2009: Some Comments On SJ Asset Management's 15.7% Stake In Maxbiz

Hmmm.... so Messrs Ferrier Hodgson MH Sdn Bhd is saying that Geahin's plant and machinery against which the RCSLS were issued were either not in working condition or “not sighted” and that Geahin’s receivables which had already been paid to Geahin or were non-existent.

But what about the responsibility from Maxbiz?

They were involved in a multi-million takeover of a distressed company. Did Maxbiz not do a due diligence on Geahin's plant and machinery? And if they did, surely they would easily find out the state of the plant and machinery, yes? And the receivables? No due diligence again from Maxbiz?


ronnie said...

The names of directors & major shareholder should be published for everyone to see. Shameful.

ronnie said...

By all accounts many criminal acts have been committee. What are the commercial crime division of the police going to do about this ?

solomon said...

Just as curious to find out when SC/Bursa approves this kind of White knight scheme, what sort of checking are involved? Or it is a mere paper approval?

What is the Investment Banker role in this deal?