And so Manchester United Got Hammered By Citeh

It's been a while since I last wrote something about







And United got hammered. We lost. We got beaten.

The incredible thing was, this hammering made many people happy. It's not that their team won. It's simply that United got whipped badly at home in a derby match.

And no, I will still support Man United and I believe many will still do for a long time. We did not support United just because they were winning.

And I will be cheering for them against Everton later.

And no, I won't be cheering like a cow on steroid just because the other team lost.

And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

Last night, IOI Corp explained in detail on why they are pulling out from the deal to buy the plantation land from Dutaland.

I find it very unacceptable how IOI is handing this whole saga.

Their first announcement made on 25 Oct 2011:

• Reference is made to the Company’s announcement on 28 July 2011 pertaining to the sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd ("Sri Mayvin"), an indirect wholly-owned subsidiary of the Company with Pertama Land & Development Sdn Bhd (“Pertama Land”), a wholly-owned subsidiary of Duta Plantations Sdn Bhd, which in turn is a wholly-owned subsidiary of Dutaland Berhad ("DutaLand") to acquire 11,977.91 hectares (or equivalent to 29,597.42 acres) of oil palm plantation land ("Plantation Land"), for a total cash consideration of RM830 million ("Proposed Acquisition").
  
  The Company wishes to announce that Sri Mayvin had on 25 October 2011 issued a notice to Pertama Land to terminate the SPA due to non-compliance of certain terms and conditions which had been communicated to Pertama Land. Under the provision of the SPA the rights and obligations of the parties shall lapse and be of no further effect from the date of termination notice, save and except that OSK Trustees Berhad, being the stakeholder shall within a period of seven (7) days from the notice of termination refund to Sri Mayvin the deposit of RM83 million which is equivalent to 10% of the purchase consideration and interest accrued thereon.

That was it.

They terminated the S&P to purchase the land because "non-compliance of certain terms and conditions".

This is a 830 million ringgit transaction that they are terminating and at stake is a 83 million ringgit deposit paid.

The lack of detail was utterly disappointing. Surely, as one of Malaysian leading corporates, IOI Corp, could have shown the decency and respect to the investing public by explaining in detail what exactly was happening.

Now given what happened three years when IOI Corp forfeited 73 million ringgit when they pulled out of a deal to buy Menara Citibank, IOI Corp should have realised that it's absolutely crucial that they explain in full detail to the market what exactly was happening.

But no, they decided not to.

Was it an act of arrogance? I dunno...

Last night, 27 Oct 2011, IOI made another announcement. I was shocked at IOI Corp's inefficiency. Why can't they just announce it on the 25th? Why the need to make another separate announcement? Gosh! I just find it so unacceptable. Why the utter lacking in professionalism?

Anyway, this is what they said.

• We refer to the Company’s announcement dated 25 October 2011 pertaining to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.
  
  The Company wishes to announce that Sri Mayvin has communicated incidences of non-compliance/ breach of the SPA to Pertama Land vide letters dated 4 October 2011, 20 October 2011 and 21 October 2011. In summary, the incidences of non-compliance/ breach by Pertama Land of the terms and conditions of the SPA may be, among others, categorised as follows:
  
  1. Adherence to the obligation for the continued upkeeping/ maintenance of the properties in accordance with accepted agronomic practices;
  2. Discrepancies in the particulars relating to the properties; and
  3. Integrity of the title of Pertama Land in relation to one of the properties.

Finanlly.... a proper reasoning is given to the investing public.
How?

Are these three reasoning valid for IOI to pull out for the deal?

And at a stake, a 83 million ringgit deposit. Huge money at stake here!

How?

On Business Times today, IOI Corp was featured again.

• IOI maintains stand on deal turned sour
  
  By June Ramlee Published: 2011/10/28
  
  KUALA LUMPUR: IOI Corp Bhd, which stands to lose an RM83 million deposit to Dutaland Bhd from a deal turned sour, yesterday insisted that the latter had breached their sale and purchase agreement (SPA).
  
  Dutaland, however, maintained that it had not acted in breach of the SPA relating to a piece of plantation land.
  
  IOI previously announced that it had terminated the SPA to buy 11,977.91ha of oil palm plantation land in Sabah from Dutaland for RM830 million.
  
  IOI then said the cancellation was "due to non-compliance of certain terms and conditions".
  
  On July 28 this year, IOI's unit Sri Mayvin Plantation Sdn Bhd had signed the deal with Dutaland's unit Pertama Land and Development Sdn Bhd.
  
  Yesterday in a filing to Bursa Malaysia, IOI maintained that Dutaland, among others, had failed to continue upkeeping and maintaining the properties. It also claimed that there were discrepancies in the particulars relating to the properties, and that Sri Mayvin had communicated the alleged breaches to Pertama Land.
  
  Dutaland, in its latest filing to the stock exchange, said Pertama Land had consistently maintained that it was not in breach of the SPA as alleged.
  
  There had also "been non-compliance on the part of Pertama Land under the SPA as alleged or at all by Sri Mayvin", it added.
  
  Meanwhile, analysts said there will be a minimal impact on IOI's overall earnings if it loses its RM83 million deposit from the deal inked with Dutaland Bhd a few months ago. This is because IOI is a cash-rich company with profits of close to RM2 billion to RM3 billion a year.
  
  Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
  "It's too early to say (if the deposit will not be returned) but if they can prove that it is non-compliance, then they should be able to get their money back.
  
  "But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much," said one analyst.
  
  It will not be the first time IOI will lose its deposit. In 2008, the company had forfeited its deposit of RM73.4 million after it walked away from buying Menara Citibank.
  
  Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.
  Dutaland earlier said it was seeking legal advice and had notified OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10 per cent deposit paid by Sri Mayvin under the SPA and any interest accrued.

 I do not agree some of the points mentioned.

• Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
• "But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much,"

Errr.... I am simply lost.

How could these analysts take the 83 million and compare it against what IOI Corp is making as whole? Yeah, IOI Corp could be making rm 2 billion a year but goodness me, 83 million ringgit is 83 million ringgit is 83 million ringgit. This is money way beyond most of us Malaysians.

Well, what if everyone starts having such an attitude and mindset such as  'hey we make 2 billion a year, it's ok to blow away 83 million... it's just a bloody spit in the ocean....' ?

How?

Is that acceptable behavior?

No, that's not for me. Not in a million years.

But then ... looking at recent losses from IOI Corp - the 300 million forex losses, the 73 million forfeited deposit and now this.... you begin to wonder.....

And last but not least...

• Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.

Huh?

How could it not be equated?

Tell me.... sigh.

In the Citibank debacle, IOI Corp pulled out 3 months after signing and the S&P. For this Dutaland purchase, IOI is again pulling out 3 months after signing the S&P.... how are they not the same?

Two of the reasons given last night by IOI...

• 2. Discrepancies in the particulars relating to the properties; and
  
  3. Integrity of the title of Pertama Land in relation to one of the properties.

The discrepancies and the integrity of the title... shouldn't this be thoroughly examined by IOI Corp themselves before they sign the S&P?

Hey, it's a 830 million deal... surely you want to examine everything in full detail... before you sign, yes? Why sign and paid the deposit only to now claim discrepancies and integrity? Why risk losing the deposit paid? Is 83 million ringgit small change?

Now? It looks like the fate of the 83 million ringgit lies in the hands of the court.

On Star Biz: IOI, Dutaland in war of words over termination of RM830mil deal

Yet Another Multi Million Screw Up From IOI Corp?

I was shocked when I read the following set of news last night:

• IOI Corp cancels RM830m land purchase from Dutaland
• Dutaland rejects IOI Corp bid to cancel RM830m land purchase

IOI Corp had signed a deal on 28 July 2011 to purchase 11,977.91 ha (29,597.42 acres) of plantation land from Dutaland. A 83 million deposit had already been paid.

Last night, just 3 months after signing the deal, IOI Corp said it's cancelling this deal.

And of course, Dutaland quickly responds by saying it's taking legal advice since it's not accepting IOI's reason for termination.

And as you can guess, Dutaland has asked that the deposit of 83 million not be remitted back to IOI Corp.

And this looks like yet another woeful corporate exercise from IOI Corp.

Just what on earth are they doing?

This is a 830 million transaction. You just don't sign any 830 million corporate deal without making thorough due diligence before agreeing to purchase. And IOI explanation on why it's cancelling this deal is simply a " non-compliance of certain terms and conditions".

This is simply pathetic and it reminds me of the recent Citibank debacle that happened back in Nov 2008.

Here's an article on Star Biz back then.

• Saturday November 29, 2008
  IOI Corp should better explain why it’s losing its RM73mil deposit
  By P. Gunasegaram
  
  REALLY, listed companies should be a lot more careful before they pay a deposit for their proposed acquisitions. If they can’t complete their deals for any reason, they can lose hefty sums of money and raise needless suspicion over board integrity.
  Boards of listed companies and CEOs should realise that they have a statutory duty not only to their major shareholders but also to each and every shareholder – and there are many minority shareholders to consider.
  
  The least that listed companies should do when they abort their deals is to offer a full and fair explanation of why it was aborted, what were the events that had changed and why these things had not been anticipated in the first place.
  Take the deal called off inexplicably by IOI Corp after having signed on the dotted line less than three months ago and losing over RM73mil in deposits paid in the process.
  
  It had announced on Aug 28 the effective acquisition of Menara Citibank in Kuala Lumpur for RM586.7mil through the purchase of Inverfin Sdn Bhd which owned the building. Inverfin is owned in turn by Citigroup unit Citi Holding (50%), Singapore’s CapitaLand (30%) and Amsteel Corp (20%).
  
  On Thursday, Nov 27, IOI Corp, just a day short of three months of the earlier announcement, told Bursa Malaysia that it has decided not to proceed with the acquisition.
  
  The reason in IOI Corp’s own words: “However, due to the recent sudden adverse developments in the global economic environment which have spread to this region and impacted negatively on business sentiments, the Company has, after due and careful deliberations, decided that it would be in the overall best interests of the Company and its shareholders not to proceed with the Proposed Acquisition.”
  It further announced that the vendors were forfeiting the deposits paid of RM73.4mil together with interest and added that it was “seeking legal advice as to the propriety and quantum of the aforesaid forfeiture”.
  
  It is instructive to note what IOI Corp said in its original acquisition announcement: “The Proposed Acquisition will provide IOI with an immediate substantial rental income stream. With its choice location at the heart of Kuala Lumpur and well served by the surrounding infrastructure and amenities, Menara Citibank is presently enjoying close to 100% occupancy rate with quality tenants consisting of multinational companies and reputable companies in their respective industries.
  
  “In addition, the 50-storey Menara Citibank is well-maintained and well-equipped with high quality mechanical and electrical equipment and good security system. Its distinctive design and quality also distinguish itself from the competing office buildings in the vicinity.
  
  “On the whole, the Proposed Acquisition is a strategic move which augurs well for the IOI Group as it accords the Group with the golden opportunity to own one of the few available high-rise Grade A office buildings in Kuala Lumpur with first class location and prestigious address.”
  
  So, why is that changed in three months? Was there an exodus of tenants from Menara Citibank? Did the rental income drop? Was there a collapse in office space prices? Why is the acquisition not strategic anymore?
  
  Why could not IOI Corp have foreseen these problems earlier? After all, the subprime crisis was already upon us. Why did it pay the deposit which it now has most likely lost if it had felt there could be problems?
  
  IOI Corp’s explanation is poor at best and we really don’t know what it is at worst. Investors certainly expect a lot more from this company, once the darling of the stock market. And so should regulators. Minority shareholders certainly have a right to be seriously upset.
  
  Coming so soon after its recent debacle where it reported foreign exchange losses of over RM312mil for the quarter to end-September, the latest episode will put another dent in its reputation, largely unsullied until the forex episode.

See the similarities?

IOI Corp back in 2008, had also terminated a deal 3 months after signing the deal!!!!

And IOI lost its 73 million deposit back then. Me? I won't be surprised one bit if IOI loses 83 million ringgit this time for cancelling its deal with Dutaland.

It's simply embarrassing and if I am a minority shareholder in IOI Corp, I would be deeply annoyed to see what's happening. IOI Corp is supposedly one of our country's biggest corporation. In 2008, IOI lost 73 million by rescinding a deal to buy Citibank. 3 years later, IOI could now lose 83 million by cancelling this deal to buy land from Dutaland. What the hell? Does IOI have so many million ringgit to give away???

Would you blame any minority shareholder for asking 'Is IOI Corp the biggest water fish in corporate Malaysia?'

Good grief!

ps: Looks like Dutaland could get 83 million ringgit free!
ps: I got some barn yard. Does IOI want to agree to buy and then cancel to buy from me? :P

And Genting Malaysia Rewards Its Shareholders With Yet Another RPT

And so Genting Malaysia announced its 4th RPT last night.

Snippet from CIMB report:

• What We Think
  At first glance, the news of yet another RPT by Genting Malaysia is negative. Although Genting Malaysia expects to reap cost savings from the acquisition as it is E-Genting’s largest customer, the RPT might not sit well with investors. This is the fourth RPT in four years, the others being Walker Digital, Wisma Genting and Genting UK.
  
  However, we take comfort in 1) the size of the acquisition, which is small at 3% of net cash and 0.4% of total shareholders’ funds, 2) fair pricing of 5.2x P/E and 2.0x P/BV for E-Genting, and 3) the profitability of E-Genting’s business. Genting Malaysia also accounts for close to 80% of E-Genting’s revenue. Ascend International only has minimal operations at this juncture.
  
  What You Should Do
  Any share price weakness from this news should be viewed as an opportunity to accumulate the stock. Genting Malaysia’s defensive earnings and strong operating cash flow are appealing in uncertain times like these.

My comments?

It's the 4th RPT lah.

When will Genting Malaysia respect its minority shareholders and stop all these Related Party Transactions (RPT) nonsense?

Is it so difficult to respect?

CIMB said '.. we take comfort in 1) the size of the acquisition, which is small at 3% of net cash '

Gosh! This deal is worth 50 million ringgit. Is 50 million ringgit small? WTH? And how could CIMB insult the intelligence of its readers by comparing it versus the 'net cash'?

50 million ringgit is 50 million ringgit is 50 million ringgit!

And the last part... it's advice "What You Should Do - Any share price weakness from this news should be viewed as an opportunity to accumulate the stock.'

Oh yeah, as usual any share price weakness is an opportunity to accumulate the stock... but just what kind of stock is one accumulating? What kind of company is this? Does the investor looks smart investing in a company who only does nothing but RPTs? Does it make sense?

And if the minority does nothing, such transactions will keep on happening over and over and over again.

Past postings:

• 9 Dec 2009: Genting Malaysia Buys Properties From Genting Bhd
• 16 Dec 2009: MSWG Slams Genting Malaysia For Its RPT Land Deal!
• 2 Jul 2010: Genting Malaysia's UN Fortunate Entry Into UK Casino Business
• 25 Aug 2010: Shame On The 60.39% Who Voted For Genting Malaysia's UK Casino Purchase

Sigh!

And FBM KLCI Decided To Have Its Own FLASH CRASH!

Say cheese!

Was that fun or was that fun?

The culprits?

Pick your poison.... in random order

Sime Darby

Petronas Dagangan

IJM

DIGI

MISC

KLK

IOI

TENAGA

PPB Group

HLFG

MHB

HL Bank

MISSED OUT....

PETGAS

AIRPORT

ps: see the volume..
ps: where's the calculator...
ps: did i miss out any stock?
ps: Wanna know more about flash crash? Click here: Flash Crash


------------------------

From the Edge Malaysia: KLCI plunges 70 pts due to trades keyed by broker

• An official from Bursa Malaysia Securities Bhd in an e-mailed statement confirmed that the drop of the index at 4.41pm on Friday was due to trades keyed in by the said broker.
  
  Among the stocks that fell steeply before paring down losses were KLK, DiGi and PPB.

Err... is that all there is to say?

-----

This was on Business Times. ( Small piece -- it's like NOTHING happened.

• Bursa: Sharp fall due to broker deals
  
  Published: 2011/10/22
  
  KUALA LUMPUR: Malaysia's stock exchange operator, Bursa Malaysia Bhd said a sharp drop in the FTSE Bursa KLCI, its benchmark index, was due to trades keyed in on select index component stocks by a broker.
  The KLCI dropped 4.8 per cent at 4:41pm to 1,371.92 points from 1,440.52 points before recovering 10 minutes later.
  
  The benchmark index closed down 0.2 per cent for the day at 1,438.83 points.
  
  Bursa did not say if the trades were made deliberately or by accident. - Reuter
  
  Read more: Bursa: Sharp fall due to broker deals http://www.btimes.com.my/Current_News/BTIMES/articles/BURTA/Article/index_html#ixzz1bT5W6VQL

Here's Star Biz comments: KLCI down on cautious stance

Flash crash? What flash? ( I guess the flash must be really such a flash that they saw absolutely nuthin'! )

And Bursa Malaysia Gets Serious And Fines ex-Remiser Rm 60,000

And then there is the case of the ex-remiser who got fined rm 60,000.00.

RM 60,000?

Er... seriously... what kind of fine is that?

I mean if this fella is found guilty... then he's guilty... but the fine of rm 60,000???

Goodness me!

With such a MASSIVE fine.. this sure will stop any future shenanigans!

Comeon... who's insulting who?

Oh yeah... forgot to mention the fine was for 'unlawful trading'.

Gosh! What on earth is 'unlawful trading'?

Comeon!

How does one expect our stock exchange to improve and rid itself of such pathetic nonsense in the future?


On the Edge:

• Bursa Securities fines ex-remisier RM60,000 for unlawful trading Written by Joseph Chin of theedgemalaysia.com
  Tuesday, 18 October 2011 17:51
  
  KUALA LUMPUR: Bursa Malaysia Securities Bhd rapped and fined a former dealer’s representative Mohd Zahir Abd Manan RM60,000 for unlawful and unethical trading activities.
  
  It said on Tuesday, Oct 18 that it had also ordered Mohd Zahir be struck off from the Register as a dealer’s representative in unlawful and unethical trading activities in the securities of H-DISPLAYS (MSC) BHD [] and HDM-Carlaw Corp Bhd.
  It said Mohd Zahir, who at that time a commissioned dealer’s representative of PM Securities Sdn Bhd, triggered and breached the provisions of the Rules of Bursa Securities.
  
  “Bursa Securities views misconducts that compromise the integrity or honesty of registered persons seriously as registered persons, including dealer’s representatives are required to uphold the interest of their clients and the investing public,” it said.
  
  Bursa Securities said Mohd Zahir had carried out numerous unauthorised sale and purchase transactions in the securities of H-Displays and Carlaw over a period of time via two of his clients’ accounts.
  His unauthorised transactions resulted in substantial contra losses which were disputed by the clients when they were subsequently informed of the losses.
  
  It added he had colluded with a third party, who was not a person allowed and authorised, in writing, to trade on behalf of these clients. In this regard, instructions to trade via the two clients’ accounts were received from the identified third party and were carried out by Mohd Zahir. The commission generated from these trades was shared between Mohd Zahir and the third party.
  
  “Mohd Zahir had also colluded with the identified third party to manipulate these two securities by maintaining their prices at certain levels. The manipulative trading activities had impacted the price of these securities during the relevant period.
  “Mohd Zahir’s misconduct in carrying out these unauthorised trades and participating in unlawful activities, including price manipulation of these securities over a period of time, demonstrated his blatant disregard of his obligations as a responsible dealer’s representative,” it said.

Sigh!

Comeon... why can't Bursa just gets really tough on these buggers?

RM 60,000?

Bah!

Where got enough?

I Screwed UP My Earlier KNM Posting

Arrrghh....

I screwed up.

:P

KNM - Would Poor Corporate Governance Have A Negative Impact On The Stock?

That posting have one MASSIVE flaw.

What happened? Well, I relied on  the little bells provided by RHB charting. I did not verify the data and if I did, I would realise that RHB missed out the events that happened on Aug 2004. Meaning to say there was a 1 into 2 share split ( see announcement: Entitlement - Others ) and after the share split, there was a bonus issue of 1 for 2 ( see announcement: Bonus Issue )

Which means my entire posting is beyond repair.

LOL!

Excuse? I was too lazy and incompetent to check my facts.

Ok... please line up and aim all the rotten eggs over here!

ps: pls be gentle.

ps: I am too lazy to recount. hehe. But if anyone is kind enough, I welcome them to do the entire calculations for me. :P

ps: It is Monday, isn't it?

KNM - Would Poor Corporate Governance Have A Negative Impact On The Stock?

******* EDIT 10/10/2011. The following posting is rather meaningless now because I realised that
I Screwed UP My Earlier KNM Posting   ********

==========================================



Last month, I posted on the issue of the impact of corporate governance on a stock.

Do see Maybulk: Does poor corporate governance have a negative impact on a stock?

So this morning I was wondering about And KNM Directors Got Fined.... rm 25,000 Each!

( Yeah, tell me about it. A fine of rm 25,000 for a corporate director? I wonder who does the fine insult??? Really! )

Anyway, I was thinking about the impact of the poor corporate governance from KNM on its stock price.

I asked myself, what if an 'investor' bought KNM when it IPOed back in 2003 and held it till today.

Now that sounds like a fun exercise, no?

So, I opened up the chart of KNM from RHBInvest. This was KNM's chart since its listing in 2003.

Doesn't look too bad, yes?

But then I looked at all those little bells on the chart. And I made reference back to Bursa website and the result was rather interesting.

First, the IPO.

27 June 2003: PUBLIC ISSUE OF 6,680,000 NEW ORDINARY SHARES OF RM1.00 EACH AT AN ISSUE PRICE OF RM1.48 PER NEW ORDINARY SHARE PAYABLE IN FULL ON APPLICATION AND PLACEMENT OF 4,400,000 NEW ORDINARY SHARES OF RM1.00 EACH AT A PLACEMENT PRICE OF RM1.48 PER NEW ORDINARY SHARE PAYABLE IN FULL ON APPLICATION BY THE NOMINATED PLACEES

Ok, let's ass-u-me.... :)

IPO at 1.48 - 27 June 2003.


Assume 'investor' purchases 2,000 shares. This means an investment outlay of 2x1.48 = 2960.

(ps: if I do screw up with my calculations, please don't sue... just tell me and I will correct. :P )

A. 1 for 2 bonus issue Sep 2006 ( see announcement: Bonus Issue )

So total number shares becomes 3,000

B) 1 for 1 bonus issue and then share split 1 into 2 - June 2007. ( see announcement: Bonus Issue and Entitlement - Others )


Getting tricky. :P

Total number of shares held is now 3,000

After bonus issue, total number of shares becomes 6,000

After share split of 1 into 2, total number of shares becomes 12,000
 
Hope I have yet to screw up. :P
 
C) May 2008, rights issue of 1 for 4 at rm 4.00.  ( see announcement: Rights Issue )

Getting even trickier. :P

(rights issue? LOL! Put more money in babe!)
With 12,000 shares, 'investor' will be eligible for 3,000 new shares at a price of 4.00 each.

Assuming 'investor' agrees and takes up the rights issue, 'investor' puts in extra outlay of rm 12,000.

Total outlay + original cost of investment = 12000 + 2960 = rm 14,960

Number of shares held becomes 15,000

( no screw yet, I hope! )

D) 2 for 1 bonus issue. July 2008 ( see announcement Bonus Issue )

Waaaahhh! so generous! 2 for one bonus issue woh!

So the number of shares held increases from 15,000 to 30,000

Aha! Made a mistake here. :P

Investor had 15,000 shares. A 2 for 1 bonus would see investor get 30,000 new shares.

So investor would now have 45,000 shares. ( Sorry.. sorry... and thanks for the correction!)

E) 4 into one share split!! ( see announcement: Entitlement - Others )

( Hehe... KNM back then... faced thunder, lightning woh! ... let's see there were ... forced selling on CEO shares, share buybacks,  MBOs.... errr... such a happening stock.... and yeah KNM was a penny stock then! 4 into 1 .... would make KNM... appear more expensive. Hohoho! )

4 into 1 reverse share split...hmmm...30,000 shares held would be consolidated into 7,500

45,000 shares would be consolidated into 11,250 shares. ( how did I pass my maths? :P )

Ok so far?

Remember original outlay + original cost of investment = rm14,960.00 and the number of shares held is 11,2500 shares.

KNM today is 1.23



If investor cashes out today, investor gets back 11.25 x 1230 = 13,837.50


But.... cost of investment = 14,960!!!!

Arrrrrrrrrrrrrrghhhhhhhhhhhhhhh!!!!

See the wonders of holding an investment in a stock that has poor corporate governance?

But.... but..... it looks like I have screwed up!!!

Oh.... no..... oh yeah!

I left out all dividends. *&^^:$%^#^%%#@@

hey but if you are interested to know how huge the dividends were... and lol.. if you think too huge... please skip the tedious counting below... :P

1. June 2004: Final Dividend
2. May 2005: First and Final Dividend
3. June 2006: First and Final Dividend
4. June 2007: First and Final Dividend
5. Feb 2008: Interim Dividend
6. Feb 2009: Interim Dividend
7. March 2011: Interim Dividend   ( I don't see any for 2010. :P )

Ok... 7 set of dividends.... should be fast and easy.

June 2004, 5 sen tax exempt. In this case, investor had 2000 shares then. This means 10 sen collected.

May 2005. 3 sen less tax of 28%. ( 3 sen also want to less tax? :P ) Investor had 2,000 shares. So dividend collected this year would be 4.32. Total dividend collected = 14.32 sen.

June 2006. 5 sen less tax of 28%. Still 2,000 shares. So dividend collected this year would be 7.2 sen. Total collected = 21.52 sen.

July 2007. 5 sen less tax of 28%. Now have 3,000 shares. So dividend collected this year would be 10.8 sen. Total collected = 32.32 sen.

Feb 2008. 4 sen less tax of  27%. Now have 12,000 shares.So dividend collected this year would be 35.04 sen. Total collected = 67.36 sen.

Feb 2009. 1 sen less income tax of 25% and 0.5 sen tax exempt. Now have 45,000 shares. So dividend collected this year would be 18.75 sen.  56.25 Total dividends collected = 123.61 sen.

March 2011. 3 sen tax exempt. Number of shares now held 7500. 11,250. So dividend collected this year would be 22.5 sen. 33.75 sen. Total dividends collected = 108.61 sen. 142.36

So total dividends collected (assuming me calculations is not screwed up) since 2003 is 108.61 142.36 sen.

Let's add this figure to the earlier calculations...

Cost of investment - 14,960
Shares worth today -  13.837.50 *** corrected figure ***

Dividends collected - 1423.60 ** corrected figure ***


How?

* hehe... got profit woh! *

And KNM Directors Got Fined.... rm 25,000 Each!

Last April 2010, I wrote the following posting KNM's MBO Fails

Let me reproduce the entire posting:
......................

It was a laughing stock the day KNM's management announced its proposed management buyout.

It was noted in the postings KNM: Do Show Us The Money! and KNM: Should I Stay Or Should I Go?

Yesterday KNM announced what was simply expected.

• Further to the Company’s announcements dated 4 February 2010 and 22 March 2010 in relation to the above, the Board of Directors of KNM wishes to announce that after due deliberation, the Company and BlueFire Capital Group Ltd (“BlueFire”), including its partners GS Capital Partners VI Fund L.P and Mettiz Capital Limited, are unable to reach an agreement on the pricing of the Proposed Acquisition. Hence, the parties have mutually agreed that the proposal made by BlueFire on 4 February 2010 has lapsed.

Company and the bidders unable to agree on the pricing of the proposed acquisition? ( That announcement link: here )

That's all it can say? Is that all?

What a bloody disgrace!

Surely the company can be more transparent and shows the respect to the investing public how they failed to come into agreement on the pricing issue. What was BlueFire final bid? Was the proposal on 4th Feb 2010, the only proposal? Any newer proposal made by BlueFire? Was BlueFire even serious about the management buyout?

And who are the members of KNM management that are involved in the management buyout?

Last but not least, given what has transpired, and if the management that are involved in BlueFire's acquisition bid continues to remain in charge of the company, how should the minority shareholder view what has happened?

Biggest question that needed to be asked is, "Does the current management even has the interest of the minority shareholders in mind?"

What if the management and BlueFire returns with a much lower pricing? Not possible?

Exactly. How can the minority shareholders trust the current management now?

The current management involved with BlueFire, should look themselves in the mirror and ask themselves what have they been doing the past couple of months? Have they been focused on running and managing the company? Or are they only interested only in doing the management buyout for their own vested interest?

Stinks doesn't it?

In my flawed opinion, the board of directors should review the loyalty and the integrity of the current management involved in BlueFire. If there is no loyalty and no integrity, these management should simply go!

The Star Business carried a much detailed article: KNM deal falls through

• Thursday April 15, 2010
  KNM deal falls throughBy RISEN JAYASEELAN
  
  Offer lapses due to disagreement on pricing
  
  PETALING JAYA: The deal to acquire the assets and liabilities of oil and gas company, KNM Group Bhd, has fallen through due to a disagreement on pricing.
  The company said yesterday that the offer had lapsed by “mutual agreement of the parties,” as there was no agreement on the pricing.
  
  It is understood that a meeting between the buyers and the board of directors of KNM had taken place yesterday afternoon, prior to the announcement.
  
  StarBiz had three weeks ago highlighted the possibility of the buyers withdrawing the offer or lowering their price. Then, the buyers had completed their due diligence on the assets of KNM and yet, had not come up with any firm offer. The buyers had made a conditional offer to buy the assets of KNM on Feb 4, subject to a due diligence. The offer was at an indicative price of 90 sen per KNM share, totalling RM3.5bil.
  
  It is not clear what price the buyers had offered yesterday but an analyst familiar with the situation said the board had asked the buyers for a price which was at a certain premium over the market price of KNM’s shares.
  
  That, however, was more than what the buyers were willing to pay for KNM’s assets, the analyst said.
  
  Maybank Investment Bank believed that the buyers had made a final offer of between 60 and 70 sen. In a note issued yesterday, Maybank Investment expected the market to react negatively over the deal falling through. Should the deal fall through, “we tactically downgrade KNM to a sell in the short term, ahead of this negative newsflow,” Maybank Investment wrote.
  
  On the other hand, Kenanga Research head Yeonzon Yeow said that should KNM’s price dip below 60 sen a share, it would be a buying opportunity. Yeow has a fair value of 70 sen per KNM share, based on a price earnings multiple of 10 times the 2011 forecast earnings of KNM.
  
  But some other research houses have a lower fair value of KNM, such as OSK Research, which has a fair value on KNM at 59 sen and TA Research at 62 sen. Both research houses said their fair values exclude considerations of the then indicative offer of 90 sen.
  
  KNM founder and major shareholder Lee Swee Eng, a private equity firm called Mettiz Capital and a Goldman Sachs unit, are all part of the group seeking to buy KNM’s assets which include foreign companies in Germany and Italy.
  
  The due diligence, which was conducted by foreign-based consultants including KPMG, is said to have cost the buyers a few million US dollars.
  
  It is not surprising that the buyers are no longer keen to pay 90 sen a share for KNM’s assets as the latter posted an unexpected loss of RM31mil in its fourth quarter ended Dec 31, 2009. This dragged KNM’s full-year 2009 net profit to RM171mil, almost half the previous year’s RM336.4mil. The result was also significantly below analysts’ consensus forecast for FY2009 of RM288.7mil.
  
  The poor fourth quarter results were due mainly to provisioning for foreseeable losses in its operations in Brazil, Canada and Indonesia, coupled with a revaluation of the group’s Canadian properties. Analysts said that due to the low price of oil and the general economic malaise, many of the projects that KNM was supposed to have participated in had failed to materialise.
  
  Analysts said it was unlikely another offer for the assets of KNM could happen soon, considering that this group of buyers had already gone though a due diligence and yet could not agree on a price with the board.
  
  The attempted KNM deal may also go down in corporate history as one of the last attempted mergers and acquisitions that had sought to use the assets and liabilities route that required only a simple majority of shareholders to approve. It would also have been the largest private equity deal ever done in the country.
  
  The regulators are very likely to raise the shareholder approval threshold of such deals to 75% in the coming weeks.

.......................

And today 6 Oct 2011 'something' is finally done about such disgraceful behavior.

Bursa Securities raps KNM, fines directors RM200,000

Yeah.. that 'something' ... amounts to a WHOPPING rm 200,000..... :(

It's now Oct 2011 and the fine is only rm200,000?????

And to be precise that's just a shocking rm25,000 fine for each of its directors!!!

Sigh.... such a big fine... how will such fine deters others from pulling such disgraceful stunt in the future?

• Bursa Securities raps KNM, fines directors RM200,000 Written by Joseph Chin of theedgemalaysia.com
  Thursday, 06 October 2011 19:07
  
  KUALA LUMPUR: Bursa Malaysia Securities Bhd publicly reprimanded KNM GROUP BHD [] for breaching the Main Market Listing Requirements.
  
  The regulator had on Thursday, Oct 6 also rapped and fined its directors a total of RM200,000 for not disclosing enough details about a proposed takeover in February 2010.
  
  The regulator said KNM’s announcement was “not factual, unclear, inaccurate and lacked sufficient information and material facts to enable investors to make informed investment decisions”.
  
  Bursa Securities fined managing director and major shareholder Lee Swee Eng and seven others RM25,000 each for breaching the listing requirements.
  They were executive directors Gan Siew Liat, Chew Fook Sin and Ng Boon Su, independent non-executive directors Datuk Ab. Halim Mohyiddin and Lim Yu Tey.
  
  Two former board members -- Dato’ Mohamad Idris Mansor (resigned April 28, 2010 as independent non-executive chairman) and Lee Hui Leong (resigned on April 8, 2010 as executive director) – were also fined.
  
  Bursa Securities said the directors had breached paragraph 16.13(b) of the Main LR for permitting, knowingly or where they had reasonable means of obtaining such knowledge, KNM to commit the breach.
  
  To recap, KNM had on Feb 4, 2010 announced BlueFire Capital Group Ltd (Bidco), a company controlled by Lee Swee Eng (who was a major KNM shareholder) about a proposal to acquire the KNM.
  
  The proposed price was equivalent to RM0.90 per issued ordinary share of KNM.
  
  However, Bursa Securities said the Fe 4, 2012 announcement did not disclose crucial facts which were contained in the Bidco offer letter.
  
  Among them was that the proposed acquisition would be fully settled by redeemable convertible preference shares in a new entity and the RCPS can be converted into non-voting ordinary shares in Bidco or redeemed for cash.
  
  Another condition which was not stated in the announcement to shareholders was there was not new shareholder holding 5% or more in KNM or existing shareholder increasing their shares by 5% or more; or more than 10 new shareholders holding 1% or more in KNM shares.
  
  “The conditions which formed an integral part of the Proposal were clearly of interest and material to shareholders and investors to enable them to make an informed decision regarding the proposal,” it said.
  
  Bursa Securities said the conditions were material to assess the reasonableness of the offer and certainty of the acceptance by KNM of the proposal.
  
  Bursa Securities noted that KNM’s share price and volume traded had increased following the announcement. KNM’s share price rose from 75 sen to 81.5 sen on Feb 5, 2010 and the volume traded on that day was 142 million (3.5% of KNM’s share capital) versus the past five-day average of 15.9 million shares traded.
  
  The proposal subsequently lapsed on April 14, 2010.
  
  

Special Audit To Be Carried Out On Xian Leng!

Yet another stock hitting the headlines for the wrong reason.

• Xian Leng to conduct special audit
  
  Published: 2011/10/05
  
  Xian Leng Holdings Bhd said there might be some financial irregularities involving some RM17.36 million in capital expenditure.
  
  The company plans to hire an independent party to carry out a special audit.
  
  The amount is significant because for the past two financial years, Xian Leng's group revenue came in just under RM20 million.
  
  Xian Leng has suffered three straight years of losses. For the second quarter of the current financial year ending January 31 2012, it posted a net loss of RM1.3 million, up from RM1.21 million in the same period a year ago.

Special audit is now required to check on Xian Leng's rm17.36 capital expenditure.

Hmmm.... well this is one area to be cautious. For example, money spend on capital expenditure could be overstated. Or remember the case of Megan Media where millions were borrowed and spend on new plants and machinery. Upon audit the plants and machinery were no where to be seen!

Now I am not saying this is what's happening in Xian Leng, in fact I simply have no idea what's happening but I am certainly anxious to discover what happens next.

Oh yeah, we had seen recently that many companies had spend millions and millions on capital expenditure. Perhaps the prudent investor should be cautious against such companies who have the nasty habit of making millions and millions in capital expenditures each year.

And London Biscuits Disposes Its Investment For A Loss Again!

This morning I saw the following news article.

• Huat Lai to buy TPC Plus for RM8m
  
  Published: 2011/10/04
  
  HUAT Lai Resources Bhd (HLRB) has signed a deal to buy 33.65 per cent of poultry company TPC Plus Bhd from London Biscuits Bhd for RM8.1 million, or some 30 sen a share.
  
  HLRB will announce details of its mandatory general offer in due course.

London Biscuit made another disposal???

Well, to freshen my grey cells, it was just in Aug 2010, London Biscuits was in limelight for all the wrong reasons. On 23rd Aug 2010, London Biscuits announced it was selling its stake in Lay Hong. ( See Bursa announcement: DISPOSAL BY LONDON BISCUITS BERHAD OF ITS ENTIRE EQUITY INTEREST IN LAY HONG BERHAD (“DISPOSAL”)

Original investment cost is 12.088 million.

Disposal price of investment is 11.851 million!

That stake was bought in 2006.

Mind you, the stock market back in 2010, was fairly hot.

And if one followed the posting Review Of London Biscuit, it was so clear that that the money invested by London Biscuit came directly from the funding exercises like bank borrowings!

Now would you personally borrow money to invest?

I bet you wouldn't but that was what London Biscuits did!

Let me repeat what was posted in the posting London Biscuits Disposal Of Its Stake In Lay Hong

( Recommended reading also: Regarding London Biscuits Borrowings )

--------------------


Let me reproduce the balance sheet table I made in the posting Review Of London Biscuit again.




Look at the 10 Q3 cash. It says 15.608 million.
Look at the size of London Biscuit's debts. 218.004 million!

Clearly London Biscuit is lacking cash right now, yes?
Isn't it so clear that London Biscuit needs to 'sell'????

And yes, why did London Biscuit's debts soared in the first place?

As mentioned and shown clearly in the posting Review Of London Biscuit, London Biscuit used cash generated from bank borrowings to make such 'investments'.

And the return from one such investment?

Original investment cost is 12.088 million.
Disposal price of investment is 11.851 million.


How?


Lost money in the investment and not forgetting the cost of borrowings needed to make such an investment!


Yes.... it's absolutely shambolical!

And yeah.. let us not forget about the other shambolical investment in Khee San!

• The Board of Directors ("BOD") of LONBISC are pleased to announce that the Company had on 17 September 2007 signed a Sale & Purchase Agreement dated 17 September 2007 between KHEE SAN REALTY & HOLDINGS SDN BHD (“KSRH”) for the Proposed Acquisition of 18,420,300 ordinary shares of RM1.00 each in KHEESAN representing approximately 30.7% of the enlarged issued and paid-up share capital of KHEESAN (‘the said Sale Shares”) for a total cash consideration of RM27,630,450.00

18,420,300 million shares of Khee San bought at a CASH consideration of 27,630,450.
Glee! That's a cost per share 1.50.
What's the price of Khee San today?
0.565!!!!!!!!!!!!

oO

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

( Khee San is currently untraded today (4 Oct 2011) at 51 sen!!! )
----------------------

Ok, so Lay Hong was disposed at a loss.

But sadly for London Biscuit, the disposal turned into great embarrassment for them! Lay Hong, the stock (or the chicken) flew up, up awayyyyyyyyy!

No joke!

Borrowed money to 'invest' in other stocks.

To improve cash flow, London Biscuits disposes the stock.... at a stock.

Stock.... then flies!

Sounds comical?

So today, London Biscuits says it disposes its stake in TPC Plus!

I quickly summoned Bursa website for London Biscuit's announcement.

Here is their pdf file

Page 2.

• The original cost of investment was RM8,472,426.00 and the date of such investment was 2 February 2010.

Original cost of investment 8.472 million. Selling for 8.075 million!

Selling at a discounted price once more!

Oh myyyyyyyyyyyyyyyyy!

 
And the rationale for disposing...
 

• The Proposed Disposal is to enable the LBB Group to focus on its core business of cake,
  candies, wafers and snack confectionery.

How?
 
Me? As mentioned many times before, I am not a fan of this