Leong Oi Wah ,
Aduan Bursa ,
5 Sep 2020 09.54
SC Case: SC2020-12107 and Bursa Ref: CC/38/20 - Official complaint in seeking Bursa and SC to investigate and reject JAKS revise Rights Issue:
Dear JAKS CEO Andy Ang,
Refer below email from Bursa dated 25th Aug 2020. I had replied to Bursa and would now like to directly reply to JAKS in Red:
We refer to your complaint against Jaks Resources Berhad (“JRB”) and the responses are as follows:
1) Paragraph 6.15 require the placee list to be submitted to the Exchange and not via announcement. The Company has complied with this requirement for the past placement exercise.
May I know did placees still hold to JAKS shares or they already long sold the shares for profit and did any placee hold more than 5% as there is no announcement on substantial shareholder?
2) Shareholders’ approval has been obtained for the issuance of the LTIP shares at the EGM held on 28 June 2016. The LTIP shares were not issued pursuant to the general mandate under Section 75 and 76 of the Companies Act 2016.
Isn’t the latest law or amendment precede or supersede the approval done at EGM held on 28 June 2016? And thus invalidate the approval of EGM on 28 June 2016.
AGM held on 26 June 2018: Authority to allot shares pursuant to Sections 75 and 76 of the Companies Act 2016 “THAT pursuant to Sections 75 and 76 of the Companies Act 2016 and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company; should take precedent.
3) Please refer to the email sent earlier today pertaining to the complaint on AGM minutes.
You can refer to my reply to Bursa CC to you dated: 26 Aug 2020
1) Please be informed that the requirement on not more than 10% discount for the issue price is applicable for private placement exercise implemented pursuant to general mandate under Section 75 and 76 of the Companies Act 2016. Other than this, there is no requirement on the maximum discount for the issue price for other fund raising exercises.
As CEO of public listed company is it morally right to give heavy discount rate and sweetener free warrants that will only benefit the underwriters? And minority shareholders that do not have financial means to take up their RI will see their shareholding diluted severely and their investment go down the drain.
2) The Proposed Rights Issue with Warrants (as announced on 13 July 2020) is a subsequent announcement made for the Revisions from the Original Proposed Rights Issue with Warrants and as such, is the same corporate exercise as announced on 22 May 2020.
As set out in Section 8 of the Initial Announcement, the Board, having considered all aspects of the Proposed Rights Issue with Warrants (including but not limited to the rationale and justification as well as the effects of the Proposed Rights Issue with Warrants), is of the opinion that the Proposed Rights Issue with Warrants is in the best interest of the Company. In view of the improved equity market conditions during the said period, the Group intends to reduce its reliance on bank borrowings. The revised Minimum Subscription Level of RM200.00 million will allow the Group to raise higher minimum gross proceeds from the Proposed Rights Issue with Warrants compared to the original Minimum Subscription Level of RM130.00 million.
Please explain what do you mean by improved equity market conditions during the said period any data to back up this claim?
From what I understand since loans interest rate is at history low level it is the best time to borrow money when you are sure of consistent income for 25 year from JHD power plant and moreover from your own words:
Jaks resources expects the coal power plant in Hai Duong province, Vietnam, to achieve commercial operation in November this year, and it is expected that the energy business will contribute more than half of its profit in FY2021洪楠堡指，公司截至2019财年末季的净负债，仍处于约0.28倍的低水平。“这让公司有能力融资，供未来收购业务。”
Andy Ang pointed out that the company's net gearing ratio as of the end of the fiscal year 2019 is still at a low level of about 0.28. "This gives the company the ability to raise funds through borrowings for future business acquisitions."
The market prices of JRB Shares are determined by, amongst others, market forces and are not within the control of the Board and the Company.
As CEO of public listed company do you understand market force is based on perception on the health of the company do I need to repeat:
Everyone is hopeful PublicInvest will then upgrade JAKS like MFCB but instead PublicInvest ceasing coverage after repeat warning, “All told, we are still wary over the various dilutive equity fund raisings done so far to meet its liquidity demands and the poor execution especially on its property business”
The current RI is the last straw that broke the camel’s back, it show how poorly CEO Andy Ang on execution that instead of turning “Cash Cow JHD Vietnam Power Plant” into rewarding the shareholders but alas a poorly thought out RI had turned shareholders into Cash Cow for the JAKS/CEO/Underwriters to milk its dry.
3) The construction profits from the Power Plant have been recognised and reported in the financial statements over the relevant periods in accordance with accounting standards. This can be seen in segmental reporting information in the annual report and quarterly announcements. As disclosed in Note 37, page 140 of the Company’s Annual Report 2019, RM817.6 million of revenue was recognised for the financial year ended 31 December 2019.
As disclosed in Note 8, page 107 of the Company’s Annual Report 2019, approximately RM365.12 million (approximately USD88 million based on current exchange rate of 4.2) has been invested in the equity of JPP, substantially from the said construction profits.
If the construction profits from the Power Plant is sufficient to subscribe for the equity of JPP as promised by CEO Andy Ang then why the need for current RI (Subscription of additional 30.00 million JPP USD Shares)?
I am now appeal to the Board please considers bank borrowing and if really need RI to raise fund then please consider the below more fairer and equitable RI, discount should be capped at 10% and free warrants distribute to the current shareholders and subscriber of Rights shares.
For illustration purpose: My suggest propose Rights Issue with Warrants may now entail an issuance of up to 321,821,645 Rights Shares together with 321,821,645 free Warrants based on the above mentioned enlarged number of 804,554,115 Shares in issue, a revised illustrative entitlement basis of 2 Rights Shares for every 5JRB Shares held with 1 warrant for every 5 JRB shares currently held and 1 warrant for every 2 Rights shares subscribe and a revised illustrative issue price of RM0.815 per Rights Share, the issue price of the Rights Shares is now assumed at RM0.815 per Rights Share throughout this announcement, which represents a discount of RM0.090 or approximately 10% to the TERP of JRB Shares of RM 0.907, calculated based on the 5-day VWAMP of JRB Shares up to and including 7 July 2020, being the latest practicable date prior to this announcement (“LPD”) of RM0.9443.
The exercise price of the Warrants is now assumed at RM0.905 per JRB Share throughout this announcement, which represents the TERP of JRB Shares of RM0.905 calculated based on the 5-day VWAMP of JRB Shares up to and including the LPD of RM0.9443.
Lee Soon Sheng
PS: By the way I had submitted my questions in advance for JAKS 18th AGM but unfortunately neither JAKS IR and Company Secretary acknowledge receipt of my questions.