The low-down on the problems at Asia Media

TheEdge Mon, Feb 01, 2021 06:00pm - 3 months ago


ASIA Media Group (AMG) is likely to be in the spotlight for the near term, with the appointment of legal advisers and forensic auditors at the company.

According to AMG’s announcement to Bursa Malaysia, it had appointed law firm Krish Maniam & Co “to investigate the possibility of losses caused by certain individuals with decision-making powers prior to the entry of the current board of directors. Essentially, the review is linked to the write-downs and depreciation of the company’s assets and their whereabouts that directly and/or indirectly led to the current impairment and write-downs”.

AMG has estimated an initial RM103.2 million in impairment losses, which is sizeable considering that its market capitalisation at last Thursday’s close of 15 sen was only RM35.92 million.

Much of what is going on at AMG must be viewed together with a legal suit at the High Court last May between the Securities Commission Malaysia (SC) and Datuk Ricky Wong Shee Kai, his mother Teh Sew Wan and their holding company Wong SK Holdings Sdn Bhd. The charges are under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

To recap, AMG founder Shee Kai was CEO and an executive director of the company, but he was removed by shareholders at an EGM in July 2019. He and Teh ceased to be substantial shareholders of AMG in February that year, but they held as much as 65.13 million shares or 27.2% equity interest in the company prior to selling down their shareholding.

A warrant of arrest for Shee Kai was issued by the Kuala Lumpur Magistrate’s Court in late December 2019 as he failed to appear before the SC’s investigating officer. In April last year, the SC sought the help of Interpol to locate Shee Kai.

The High Court granted an order to freeze as much as RM169.22 million in assets held by Shee Kai, Teh and Wong SK Holdings, in relation to securities fraud under Section 179 of the Capital Markets and Services Act 2007 (CMSA) involving Bright Packaging Industry Bhd. Section 179 of the CMSA covers the “use of manipulative and deceptive devices” in the subscription of shares.

While the details are scarce, court documents viewed by The Edge highlight that more than 60 bank accounts and shares held by Wong SK Holdings in Bright Packaging were scrutinised by the SC.

The SC is looking for “complete and accurate” accounts for RM35 million received from BTV Cinebus Sdn Bhd, Transnet (JB) Sdn Bhd and Matrix Angle Sdn Bhd, pertaining to a rights issue undertaken by Bright Packaging in early 2014; RM7.79 million received from Sierra Broadway Sdn Bhd, Warisan Serantau Sdn Bhd and Ikhtiar Syahdu Sdn Bhd, with regards to a private placement by Bright Packaging in July 2014; and RM13.28 million from Gemas Kaliber Sdn Bhd, Makro Ternama Sdn Bhd and Kaliber Semangat Sdn Bhd, pertaining to an employee share option scheme (ESOS) by Bright Packaging in February and April 2015.

Is there a link between Bright Packaging and the RM103.2 million in impairments at AMG?

Shee Kai and Teh, via Wong SK Holdings, emerged as substantial shareholders of Bright Packaging with 9.84 million shares or 22.73% equity interest in October 2013. As at end-November last year, the company held 32.94% of Bright Packaging.

One of the issues stems from a proposed renounceable rights issue of 86.57 million new shares on a two-for-one basis, with 57.71 million free warrants on a two-for-three basis as a sweetener, which Bright Packaging announced in November 2013. Wong SK Holdings agreed to subscribe for a portion.  

Shee Kai’s late father Wong Yet Long controlled close to 33% of Bright Packaging via his vehicle Demi Maju Sdn Bhd. Yet Long was executive chairman of Bright Packaging.

He was also involved in a few listed companies, including Long Huat Group Bhd (now Lee Swee Kiat Group Bhd), and controlled NWP Holdings Bhd and Bright Packaging. He passed away at end-September 2004.  

According to the SC’s website, Shee Kai and Teh had sought to “defraud Bright Packaging in connection with the sale of securities via Bright Packaging’s rights issue, private placement and ESOS exercises”.

A source familiar with the goings on at AMG says, “The investigations are ongoing. Then, there will be some clarity … until then, I don’t want to speculate.”

Checks on the private companies mentioned by the SC did not reveal much. One of the companies, Transnet JB, could not be found.

The Companies Commission of Malaysia (CCM) reveals that many of the nine companies mentioned by the SC have the same registered address at Plaza Pekeliling or the same business address in Puchong or Serangoon, Singapore.

Also, many of the companies had common directors. Some of the directors of these companies are being sought by the SC to “assist the regulator on several ongoing cases”.

The source adds, “Even if they [AMG] could get hold of half the money [RM103.2 million], it would be great.”

AMG is currently classified as a Practice Note 17, or a cash-strapped, company. It has until October to come up with a restructuring plan.  

AMG is in broadcasting, advertising and digital media, but it has done little in terms of business. For the nine months ended September 2020, it suffered a net loss of RM470,000 from RM394,000 in revenue. As at end-September last year, the company had only RM4,000 in cash and bank balances while its accumulated losses stood at RM29.02 million.

Interestingly, there is an ongoing tussle for control of AMG. Earlier this month, three shareholders — Datuk Chu Boon Tiong, Sim Ah Yoke and Chow Zee Neng, who collectively hold more than 10% equity interest in the company — sought to appoint new directors to the board via an EGM on Feb 18. They are looking to remove Datuk Raja Munir Shah Raja Mustapha, Datuk Kang Hua Keong, Yap Ping Tiong and Chua Yeong Lin from the board and replace them with Chu, Matthew Chan Cheng Han, Tan Vei Teck and Loi Chee Fong.

Chow, a substantial shareholder and former chairman of AMG, was removed with Shee Kai in July 2019. He holds 7.29% equity interest in the company.  

Chu is known in corporate circles as an executive director and substantial shareholder of electronic company Industronics Bhd. He is also a director of NWP, a company that deals in timber products.

Chan, who is being proposed as a director of AMG, is an independent director at NWP.  

Shee Kai’s half-brother, Wong See Ming, holds a 10.28% stake in NWP and was an executive director from January 2001 to April 2018. See Ming was a director at Bright Packaging from August 2001 to April 2008.   

The share price of Bright Packaging, which makes aluminium foil laminate and offers packaging solutions, closed at 25 sen last Thursday, giving the company a market value of RM51.3 million.

 






Related Stocks

AMEDIA 0.145
BRIGHT 0.230
BURSA 8.200
ITRONIC 0.255
LEESK 0.930
MEDIA 0.615
NWP 0.185

Comments

Login to comment.