INVISIBLE DOG - INTERVIEW WITH THE KELONG KING: WILSON RAJ PERUMAL
INVISIBLE DOG - INTERVIEW WITH THE KELONG KING: WILSON RAJ PERUMAL |
Linear sees entry of new white knight | The Edge MarketsSource URL: https://www.theedgemarkets.com/article/linear-sees-entry-new-white-knight-0 |
Linear sees entry of new white knight
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".
With the appointment of the three new directors to Linear’s board, two other directors have also resigned, apart from Yap.
Announcements to Bursa Malaysia yesterday saw the resignation of a previous non-independent and non-executive director Eswaramoorthy Pillay s/o Amuther who was earlier charged in the court for abetting former LFE Corp Bhd director Alan Rajendram Jeya Rajendram in committing securities fraud and four other Penal Code offences.
Alan Rajendram was also a director at Linear before resigning in May 18, 2010, following the saga of the RM1.66 billion "King Dome project" in Manjung, Perak that was awarded by Seychelles-based Global Investment Group Inc (GIG).
The saga unravelled when the project was called into doubt and Linear had transferred all its cash of RM36 million to GIG. Alan Rajendram and Eswaramoorthy Pillay, who called the shots at Linear, are now out of the company.
Meanwhile, Linear had on Monday reported its 2QFY10 results for the period ended June 30, 2010. The company turned in a net profit of RM2.69 million, or 3.6 sen per share, on the back of RM2.77 million in revenue. Its net assets per share stood at 71 sen.
It is learnt that despite the loss of almost all of the company’s cash due to the King Dome project, Linear is still able to carry out its business, but with quick turnaround timeframes, to reduce large cash commitments.
Sources tell The Edge Financial Daily that Linear has still been able to pay its workers with a maximum one month delay in wages despite the current cash situation.
"It is still business as usual for Linear, workers wages are still being paid but sometimes slightly delayed. There is still money to be made from this business," said a source.
Linear had on Aug 10, 2010 appointed PricewaterhouseCoopers Advisory Services Sdn Bhd (PwC) as a special auditor to undertake an independent investigation into the financial affairs of the company.
PwC would be tasked with identifying irregularities, including but not limited to the existence of the operations and conduct of the prime savings and trust accounts in Sweden where RM36 million was purportedly paid out.
Linear’s share price yesterday closed 0.5 sen higher to 8.5 sen on heavy volume of two million shares.
This article appeared in The Edge Financial Daily, September 2, 2010.
"Alan" Cheat RM47mil = Bursa ScandalSource URL: https://forum.lowyat.net/topic/1939269/all |
"Alan" Cheat RM47mil = Bursa Scandal
"If our lawyers say we have proof to prosecute, we will go after the previous board for recovery. We have a role to play to improve the image of this board and we will not sweep anything under the carpet," said Linear director Datuk Ling Keak Ming.
He said police reports have been lodged against two of the previous directors, but he did not name them. However, he did confirm the "Alan" named in the PwC report as one of the key individuals behind Linear’s troubles is its former director Alan Rajendram.
Rajendram was charged by the Securities Commission on June 24 last year, not for the troubles at Linear but for securities fraud and eight other offences at another public listed company in which he was a director.
Ling was appointed to the board as a non-executive director in September 2010. A former director of Magnum Corp Bhd from 2000 to 2007, he is the managing director of MWE Advanced Structure Sdn Bhd and MWE Golf & Country Club Bhd.
Speaking after the company’s AGM at Linear’s plant in Prai, Ling said the new board is not in cahoots with the previous board.
Linear’s annual report for 2010 highlighted another 12 possible frauds amounting to RM47 million over 2½ years, with the receivables stated in doubt.Ling (left) and Lim talking to the press after the AGM yesterday.
With its cash reserves now "almost" nil, Linear has outstanding loans and payables amounting to RM58 million, Ling said.
Linear executive chairman and executive director Lim Hun Beng said the PwC report only covered three work streams, with another two still being verified and investigated by another auditor as part of the requirements set by Bursa Malaysia.
"What we have so far is just the tip of the iceberg," Ling said.
"We want to reveal the history ... as we have a responsibility to our shareholders and the public to disclose what actually transpired and as a responsible board, we will take action, including recovery. We are hoping to make our submissions on our regularisation plan early next month as our PN17 status has been dragging on too long," Lim said adding that the company has a restructuring plan already in place.
Once these issues and problems are settled and out of the way, the company hopes to regain the former glory of Linear, he said.
"We want to regain Linear’s respectable position as a leading cooling systems company. When the wrong captains are put in charge of a boat, this is what happens," he said.
"Linear used to command respect, and there are many customers who are still with us as our business is still going on. We will work hard to keep our customers happy and carry on with the business," he said.
The company appointed PwC to undertake the investigation under the directive of Bursa, to identify any potential irregularities including but not limited to the operations and maintenance of the prime savings and trust accounts in Sweden, where an advance of RM36 million was purportedly paid out.
PwC concluded in the report that the Dome King project announced by the company was one of the components of a scheme designed to inflate the group’s profits in 2007 and 2008. It also pointed out that Linear’s financial statements from 1999 to 2008 may have been overstated.
The King Dome project, supposedly to build a district cooling plant in Manjung, Perak, for RM1.66 billion, was "awarded" to Linear by a Seychelles-based company, Global Investment Group Inc (GIG). It was then touted as the world’s largest dome structure measuring 1,600m in diameter, housing an indoor city with retail, leisure, resort, food and beverage facilities.
But strangely, neither the project nor GIG were known to investors or the public despite its supposed scale.
Linear later paid RM36 million, almost all its cash reserves, to GIG for a "performance consideration".
The company had said the money was paid out to GIG on the instruction of a director of Linear given in an "autocratic manner", adding that there was absence of proper procedures and internal controls within the group.
PwC said in summary there had been breaches in Linear’s internal processes in relation not only to the King Dome project but also the purported sale of solar panels and non-existent cooling tower spare parts.
According to PwC, if the aforementioned sales are stripped out, Linear’s audited revenue for FY07 would decline from RM158.2 million to RM41.6 million. It would also mean the company registered a loss before tax of RM12.9 million compared with a stated pre-tax profit of RM6.7 million.
It would be a similar story for FY08, where audited revenue would drop to RM17.8 million from RM52.7 million. Linear would be in the red to the tune of RM3 million compared with its stated pre-tax profit of RM4.9 million.