Posted earlier: Yet Another Case Of Accounting Fraud
- ....... Late last year, Linear said it won its biggest project ever, the RM1.67 billion King Dome project in Manjung, Perak, for which it received a letter of award from a Seychelles-based company Global Investment Group Inc (GIG).This was supposed to be the world's largest dome structure measuring 1,600 metres in diameter, housing an indoor city with retail, leisure, resort, food and beverage facilities
Early this month, Linear said there was "no evidence of any significant progress towards the execution of the contract" and "no documentary evidence to demonstrate the overall viability of the King Dome Project".
If I recall correctly, it was unreal.
Linear was not an investment grade stock. Its fundamentals were lacking and yet it won a Billion dollar contract. It was unreal.
The Edge carried these 2 short news clip.
- Linear Corp secures RM1.6b project Written by Joseph Chin
Tuesday, 29 December 2009 18:18
KUALA LUMPUR: LINEAR CORPORATION BHD  has secured a RM1.66 billion project for the building and commissioning of a district cooling plant in Manjung Perak.
The company told Bursa Malaysia on Tuesday, Dec 29 its unit LCI Global Sdn Bhd accepted the project awarded by Seychelles' Global Investment Group Inc for the 350,000 refrigeration ton (RT) plant.
It said the plant was for the King Dome project, but details were not revealed in the announcement.
"The commencement of work is 24 months from the date of approval of the development plan by the Manjung District Council. The duration of the project will be 24 months from the date of commencement," it said
Linear surges on RM1.6b contract
Written by Joseph Chin
Wednesday, 30 December 2009 09:27
KUALA LUMPUR: Share price of LINEAR CORPORATION BHD  surged 29.5 sen to 48 sen in early trade on Wednesday, Dec 30 after it secured a RM1.66 billion project a district cooling plant in Manjung, Perak.
At 9.22am, it was up 29.5 sen to 48 sen with 2.81 million shares done.
The FBM KLCI fell 1.38 points to 1,273.84. Turnover was 40.19 million shares valued at RM32.17 million.
On Tuesday, it announced its unit LCI Global Sdn Bhd had secured the project awarded by Seychelles' Global Investment Group Inc for the 350,000 refrigeration ton (RT) plant. The plant was for the King Dome project, but details were not revealed in the announcement.
The duration of the project will be 24 months from the date of commencement, it said.
Note how the stock flew up and look at the sudden surge in traded volume....
The next day Star Biz carried the following article: Linear soars on new RM1.7bil job
- Thursday December 31, 2009
Linear soars on new RM1.7bil job
PETALING JAYA: Shares of Linear Corp Bhd rose to record levels yesterday, as investors chased the stock on news that the company had secured a RM1.66bil contract to build a cooling plant in Manjung, Perak.
The stock shot up 39.5 sen, or 213%, to close at a two-year high of 58.5 sen on a volume of 19 million shares.
The upsurge raised Linear’s market value to about RM44mil.
It remains unclear when actual work at the site will start, or how the company intends to raise funds for the project.
StarBiz tried to reach executive director Mervin Nevis via phone calls and SMS but did not receive a reply.
However, Dow Jones Newswires yesterday quoted Nevis as saying that the company was considering various ways to raise a “performance bond” for the project.
The report said other ways to fund the project could include using internal funds, selling new shares in the company or through a consortium arrangement.
No details about the amount to be raised were given, although it was understood that the performance bond could be worth as much as 10% of the total project value, according to the Dow Jones report.
In a filing with Bursa Malaysia on Tuesday, Linear said a wholly owned subsidiary had accepted the contract to design and build a cooling plant in Manjung from Global Investment Group Inc of Seychelles.
Work on the project will start 24 months after the development plan is approved by the Manjung Municipal Council.
The project is expected to be completed in 24 months from the date of commencement of works, according to the filing.
Information on its website showed Linear had completed district cooling projects in Bandar Perda in Penang and at The Curve shopping complex in Petaling Jaya.
Linear, a heating, ventilation and air-conditioning company, has a current paid-up capital of RM75.1mil based on 75.1 million oustanding shares issued to date.
It reported a cumulative net loss of RM4mil on revenue of RM13.2mil for the nine-month period ended Sept 30.
The top arrow indicates 2nd Feb 2011. This was when Bursa decides to give the UMA. LINEAR-Unusual Market Activity ("UMA") query by Bursa Securities
The next day, the Star carried the following article: Linear gets UMA query from Bursa
- Wednesday February 3, 2010
Linear gets UMA query from Bursa
PETALING JAYA: Linear Corp Bhd, a heating, ventilation and air-conditioning company, was issued an unusual market activity (UMA) query by Bursa Malaysia yesterday following recent sharp increases in its share price and trading volume.
At 5pm, the stock was up 5.5 sen to 59.5 sen after hitting a high of 63 sen earlier. Some 15.9 million shares changed hands.
On Dec 31, the stock hit 70 sen – its highest in at least five years.
Low-profile Linear in the same month had said its wholly owned subsidiary had accepted a RM1.66bil contract to design and build a cooling plant in Manjung from Global Investment Group Inc of Seychelles.
Linear joins a string of companies such as Integrated Rubber Corp Bhd, Perduren (M) Bhd and Takaso Resources Bhd that were recently issued UMA queries after their stock and volumes raced to record highs.
In its reply to Bursa, Linear said except for the Manjung project announcement, there were no other material developments relating to the group’s business that has not been previously announced.
“There are also no rumours or report concerning the business and/or affairs of the group that may account for the unusual market activity,” it said.
And by June 2010, warnings flashed strongly against Linear.
From Business Times. ( sorry no links - link broken)
- SC 'gathering facts' on Linear Corp
By Azlan Abu Bakar Published: 2010/06/09
It is learnt that Linear Corp had paid out almost all of its cash to a company in Seychelles.
The Securities Commission (SC) is believed to have started an investigation of Linear Corp Bhd (9504) after it was learnt that the company had paid out almost all of its cash to a company in Seychelles.
An industry source told Business Times yesterday that the authorities intended to find out what had actually occurred in the company.
"They (SC) are gathering all the facts now," he said.
As at March 31 2009, Linear had RM37 milion in cash, according to its unaudited accounts.
Last Friday, Linear told Bursa Malaysia Bhd that it had advanced RM36 million to Global Investment Group Inc (GIG) as a performance consideration to build a RM1.66 billion cooling tower in Manjung, Perak.
"The advance was effected solely by a director of the company at the material time in an autocratic manner," Linear told the stock exchange.
According to information obtained from Linear's latest annual report, as many as three directors quit the company this year.
They included independent and non-executive director Datuk Thangarajo A. Subramaniam, non-independent and non-executive director Alan Rajendram and Singaporean non-executive director Eswaramoorthy Pillay Amuther.
Rajendram and his partner, Eswaramoorthy, had sold a total of 14.37 million shares, or 19 per cent of the company, in April.
They were, however, not the only sellers of Linear shares.
Linear itself sold in batches some 2.6 million shares, or 3.5 per cent of the company, for RM1.95 million.
The proceeds are about 9.4 per cent of Linear's current market capitalisation of RM18.4 million.
Linear also said that it was in discussions with the four banks which had granted unsecured banking facilities.
"All of these facilities are in default and the total outstanding amount as at May 31 this year was about RM20.8 million. In addition, Linear has defaulted on a secured term loan with an outstanding amount of about RM16.7 million as at May 31," the company said.
Linear is seeking to recover the RM36 million advance paid for the project in Perak, which was awarded by GIG to its unit, LCI Global Sdn Bhd.
The two companies were supposed to seal a formal contract within 180 days of the letter of award but that did not materialise.
The cooling plant was to supply chilled water for the air-conditioning system of a big project, called King Dome, developed by GIG.
King Dome was touted to become the world's largest dome structure with a diameter of 1,600 metres. It would house an indoor city with retail, leisure, resort, food and beverage facilities.
Also from Business Times:
- Linear under investigation
By June Ramlee Published: 2010/06/16
BURSA Malaysia is investigating Linear Corp Bhd (9504) for possible breaches of listing requirements, the stock market regulator said yesterday.
In a statement to Business Times, Bursa Malaysia said that it will not hesitate to take the necessary actions against the company and the culpable directors if they find something amiss.
Linear shares have slumped to a six-month low yesterday to close at 22.5 sen, reeling from the after effects of the company's cash being passed to a company in Seychelles. Two weeks ago, Linear told the stock exchange that a company director had paid out almost all of its cash to a Seychelles company....
- Another scandal brewing, this time at Linear?
Written by Daniel Khoo
Thursday, 17 June 2010 11:11
KUALA LUMPUR: In the wake of Kenmark Industrial Co (M) Bhd’s saga, another corporate scandal is brewing at a little-known company — Linear Corp Bhd.
Linear, which manufactures cooling systems, recently updated Bursa Malaysia Securities with startling revelations on the status of its supposedly biggest project ever, the RM1.67 billion King Dome project in Manjung, Perak, for which it received a letter of award (LoA) from a Seychelles-based company — Global Investment Group Inc (GIG) late last year.
On Dec 29, 2009, Linear had announced it was awarded the contract by GIG to build a 350,000 refrigeration tonne per hour district cooling plant for the King Dome structure.
This was supposed to be the world’s largest dome structure measuring 1,600 metres in diameter, housing an indoor city with retail, leisure, resort, food and beverage facilities. Linear was to have signed the contract with GIG within 180 days from the date of the LoA dated Dec 24, 2009.
In the latest statement to the stock exchange on June 4, Linear said there was “no evidence of any significant progress towards the execution of the contract” and “no documentary evidence to demonstrate the overall viability of the King Dome Project”.
The company added that there was “no documentary evidence on the background and business experience of the promoters of GIG and on the financial standing of GIG” and that there was a “lack of full and proper documentation relating to the contractual relationships”.
This implies that the “project” may not proceed after Linear had paid a huge amount of RM36 million to GIG for a “performance consideration”.
The amount consists of almost all of Linear’s cash reserves of RM37 million as at March 31, 2010. The money was paid out to GIG in an “autocratic manner” after instructions from a director of Linear, the company said. It added that there was “absence of proper procedures and internal controls within Linear Group”.
Just about half a month before Linear disclosed these revelations, two of its non-executive directors resigned — Alan Rajendram Jeya Rajendram and Datuk Thangarajo A Subramaniam.
During his directorship at Linear, Alan Rajendram was also executive vice-chairman of the Stanton Group of Companies. Stanton Technology Sdn Bhd’s CEO is Mevin Nevis AF Nevis, who is also the executive director at Linear, and remains there today.
“I’m not in a position to talk about it,” Mevin Nevis said when contacted by The Edge Financial Daily yesterday to give more details about the purported King Dome project. He declined to comment and abruptly ended the telephone conversation.
In May 2010, the company reconstituted its board, appointing three new directors after the resignation of two directors.
After the King Dome award was announced, Linear’s share price shot up from 18.5 sen to a high of 83.5 sen in just two trading days on Dec 30 and Dec 31, 2009 on heavy volume.
Interestingly, Linear had announced the RM1.67 billion deal after the market closed on Dec 29, 2009, five days after supposedly receiving the LoA and near the end of the year, when overall trading volume on the stock market is typically low due to the holiday season.
The low-key stock was suddenly the third most actively traded stock on Dec 30, 2009 with 19.1 million shares traded. Another 24.7 million shares changed hands the next day.
Records showed that Linear was also the fourth most actively traded stock for the four-day trading week of Dec 28–Dec 31, 2009. Its shares have since been on a downward trend, closing near a six-month low at 23.5 sen yesterday.
The Edge had first drawn investor attention to this “unusual” billion-ringgit deal in the article titled “Puzzling deal for little-known Linear” in its January 11, 2010 issue. Apart from the lack of information about such a large project, The Edge highlighted that Linear was a small loss-making company and questioned its financial ability to handle such a large project, especially given its Practice Note 1 (PN1) status.
A company is classified as PN1 status when it has defaulted on its loan obligations. In late September last year, Linear was served a writ of summons by EON Bank Bhd for non-payment of interest amounting to RM133,000 on an overdraft facility taken by its wholly owned subsidiary LCI Global Sdn Bhd.
Then in December, Linear was served another writ of summons by RHB Bank Bhd for a RM2 million banking facility taken out by 70%-owned subsidiary BAC Cooling Technology Sdn Bhd.
“The board of directors has been in consultations and discussions with the four banks that have granted unsecured banking facilities to the Linear Group,” the company said on June 4.
It said “all of these facilities are in default” and that the amount outstanding as at May 31, 2010 was about RM37.5 million, including a secured term loan of RM16.7 million that was also in default.
The company, which has its headquarters in Prai, Penang and an office in Petaling Jaya, Selangor, was evasive in response to calls made by The Edge Financial Daily to both locations. “Who told you I was in charge of the King Dome project? I do not know what’s happening. You have to get to the top bosses on this matter,” said a staff.
It is learnt that both regulators, Bursa Malaysia Securities and the Securities Commission, are investigating Linear for a possible breach of its listing requirements and regulations. Things are certainly heating up at this small cooling systems company.
This article appeared in The Edge Financial Daily, June 17, 2010.
On Star Biz: Rajendram has signed guarantee on King Dome project
- Tuesday June 22, 2010
Rajendram has signed guarantee on King Dome projectBy B.K. SIDHU
KUALA LUMPUR: Alan Rajendram the former director of troubled-Linear Corp Bhd finally broke his silence to say that he has signed a personal guarantee to recover the RM36mil paid to Global Investment Group (GIG) if the agreement for the RM1.6bil King Dome project was not signed by November this year.
Rajendram resigned as director of Linear on May 18 after a fall out with his business partner Bryann Pillay. Both had controlled the company via a 19% equity stake but that stake had since been divested to parties linked to Yap Chee Keong and Saw Heng Soo, the new executive directors of Linear.
Linear is a manufacturer of cooling system and the completion of the share sale agreement is expected in mid-July.
“I have handed the reins of Linear to Pillay,’’ Alan said in a telephone interview yesterday.
Earlier yesterday Pillay said in an interview he would take ownership of the 19% block of shares if the share sale deal was not completed by mid-July and intends to “do whatever was necessary to turn the company around.’’
Pillay had received a deposit of RM1.8mil for the 19% block of shares.
Pillay, still a director of Linear, also admitted there was a fall-out between him and Rajendram.
“I have invested a lot of money in Linear and so have my friends. In the past, the company was managed by Rajendram but I am now taking a proactive role. We are addressing the issues surrounding the company, especially corporate governance issues. We are putting in place the necessary process for transparency,’’ he said.
Pillay said the day to day running of the company was now managed by Yap, Saw and another new executive director, Mervin Nevis.
A special task committee had been formed to carry out a review of financial records and statements of the Linear group, and to identity any irregularities.
Linear’s troubles began when there was no progress made after the company signed a letter of award with GIG on Dec 29, 2009 for the dome project and the RM36mil was paid out to GIG as “performance consideration’’ for a RM1.6bil King Dome project. Besides that, Linear defaulted on its loan obligations.
The contract involved the building of a 350,000 refrigeration tonne per hour district cooling plant for the King Dome structure to be located in Manjung, Perak,
Linear told Bursa Malaysia there was “absence of proper procedures and internal controls within Linear group,’’ which could perhaps explain why a huge amount of cash of RM36mil was so easily paid out to GIG. The amount consists of almost all of Linear’s cash reserves of RM37mil as at March 31, 2010.
Rajendram maintains that the project was viable, thus his rationale to give his personal guarantee and he made his exit as he did not want to influence the board on the King Dome project and the fallout with Pillay.
Pillay said the company was mulling over the possibility of shifting the project to Johor or some other states. Talks are ongoing with other states.
“As far as the board is concerned, Rajendram has to deliver even though he has resigned from the company. He signed an indemnity to redeem the monies and he has to make it good,’’ Pillay said.
Both the Securities Commission and Bursa are investigating Linear for any possible breaches of listing rules.
Linear’s share price has taken a beating since the onset of its troubles and in yesterday’s trading the share price added 1 sen to close at 19 sen.
While Linear may have its own problems, the other company both Rajendram and Pillay had once invested in was interactive IPTV solutions provider Stanton Technologies Sdn Bhd.
“Stanton is dying a slow death after Dubai Ventures, a unit of Dubai Investment Group, ceased to be a shareholder in the company,’’ Pillay said.
Stanton was initially slated to be listed on the Dubai Financial Exchange but later chose the Singapore Exchange. However, none materialised.
Pillay said he was in talks with parties to sell Stanton’s China and Thailand business.
Linear reported net loss of RM1.0mil on the back of RM2.8mil turnover for the three months ended March 31, 2010.
SC charges Alan Rajendram
- KUALA LUMPUR: The Securities Commission (SC) charged former director of LFE Corp Bhd Alan Rajendram Jeya Rajendram yesterday with securities fraud and eight other offences allegedly committed when he was a director of the company.
A statement from the regulator said the charges against Alan Rajendram, 53, were the latest in a string of enforcement actions by the SC against alleged corporate fraud and misconduct. Alan Rajendram is also a former director of Linear Corporation Bhd, which is embroiled in the controversial “King Dome” saga and was classified as a PN17 company on Wednesday.
The SC said Alan Rajendram was charged under section 87A(b) of the Securities Industry Act 1983 for “committing an act that operated as a fraud” on LFE by using RM9 million of LFE’s monies to finance the purchases of the company’s shares pursuant to a private placement and restricted offer to him.
It said the act was alleged to have been committed between Jan 4, 2007 and Feb 8, 2007, adding that the former director would be liable to a fine of not less than RM1 million and imprisonment not exceeding 10 years if convic....
By the way on 24th June 2010: Linear entered into PN17! LINEAR - New admission into PN17
But that was not it, there was another twist to all this!
Then came Sep 2010, the White Knight story!
Linear sees entry of new white knight
- Linear sees entry of new white knight Written by Daniel Khoo
Thursday, 02 September 2010 15:14
KUALA LUMPUR: PN17-status company Linear Corporation Bhd is beginning to see some light at the end of the tunnel after the entry of a white knight with the appointment of three new directors, who are planning to put the company back on its feet again.
This confirms an earlier report in The Edge Financial Daily on June 24, 2010 that the company was undertaking turnaround plans.
The three new directors: Datuk Ling Keak Ming, independent and non-executive director; Lim Hun Beng, non-independent and non-executive director; and Adam Bin Bachek, independent and non-executive director were appointed yesterday, according to statements to Bursa Malaysia.
Ling, a former director of Magnum Corporation Bhd from 2000 to 2007, is closely associated with the MWE Holdings group, where he is currently managing director of MWE Advanced Structure Sdn Bhd and MWE Golf & Country Club Bhd.
It is learnt that the previous white knight, who owned a 19.92% stake in Linear via privately held Crystal Insight Sdn Bhd has sold his stake to this new white knight some three weeks ago. The transaction price, however, is not known. As of yesterday, no details of substantial shareholder changes in the company have been announced to Bursa Malaysia.
Linear’s previous executive director Yap Chee Keong, who resigned on Aug 30, 2010, was the old white knight’s proxy to plan a turnaround for the company. After Yap’s short stint at the company, sources say the old white knight decided not to proceed with the task of pumping in more money into the company because he had other commitments.
Penang sources tell The Edge Financial Daily that the new white knight, a low profile businessman based in Penang, now plans to pump in additional funds to revive Linear.
With the additional funds, this may also change the previous turnaround plans, which had included a sale and leaseback of Linear’s factory plant in Penang to raise cash for the company’s operations.
“A new white knight removes the need for the company to sell the company’s core asset when the cash is pumped in,” said a source.
An announcement by Linear to Bursa Malaysia with its recent second quarter (2Q) results stated that there are plans for “new injection of funds for working capital by potential new investors as a prelude to concluding a corporate restructuring exercise to get the company out of current PN1 and PN17 status”....
Linear rallies to more than 2-month high
Do note Linear rallied from 8 sen on the back of that White Knight or white horsie story to a high of 29 sen on 9 Sep 2010!
And Linear then denied the White Knight story.
The arrows on the chart above are rather self explanatory.
And Linear today? Its last traded price is 9 sen.
But here's the interesting thing.
Last Sep, I actually made a posting on Linear! Yes I did.
On 7th Sep 2010, I wrote Oh, That Linear Stock!. Guess what? The so-called rubbish stock I wrote back then.... did not fall!
Remember on 9th Sep, two days after I made that 'horrible' posting, Linear soared to an intraday high of 29 sen.
See? See? See?
How many times must I say... I don't own a voodo stick that can cause a stock to plunge!