When “CI Group” plays the same role as “Stark Corporation”, won’t investors be frightened after paying 724 million baht in advance to invest and put in the guarantee money but without receiving the transfer? It was so hot that the stock market had to respond, fearing individual investors would be seriously harmed. It turned out that all members of the committee supervising the deal had resigned. The company explains that it has been rented and is waiting to be resold. Some companies do not have sufficient funds to raise funds and therefore require payment gradually. As for many companies interested in purchasing, if it is not worth it, they ask for cancellation and refund of the deposit.
I have to admit it’s only because of the Stark Corporation Public Limited (STARK) events that have happened since then, when there were signs of something strange happening. The Listed Company (Limited) is sure to make investors’ spines tingle as well.
Recently, an unexpectedly shocking event occurred again when CI Group Public Company Limited (CIG), a business company that produces cold coils and hot coils for sale domestically. Overseas, the Stock Exchange of Thailand (SET) was asked to clarify information in the financial statements for the second quarter of 2023 that was suspicious on September 29.
Because the aforementioned financial statement shows that the company paid in advance the price of the shares and deposited damages deposits for due diligence procedures in a total of 724 million baht, which represents 84% of the company’s shareholders’ equity. Part of it is an advance payment for the full amount of shares. Although the shares mentioned are shares, the Audit Committee has ordered more caution in conducting transactions. It later became clear that the aforementioned deal led to the postponement of the ownership transfer period and the subsequent modification of the investment model.
The SET ordered CIG to come out and explain the information through the Information Dissemination System by October 16, 2023, and required investors to study CIG’s financial statements and follow the company’s explanations before considering investing. This incident caused the stock price to actually fall. It is more difficult to find signs of recovery in the short term. From the stock price which was moving between 0.50 – 0.60 baht per share at the beginning of the year. Currently, CIG’s stock price is moving below 0.20 baht per share.
As for the origin of the matter, the company came out to clarify that. Since CIG submitted the financial statements for the second quarter of 2023, the auditor has made an observation about the group making an advance payment for shares and placing security deposits to check the status of several target companies (due diligence).
I paid the money and couldn’t get it back.
This is because the amount has a significant impact on the company’s financial position. Because it is a large down payment before receiving the stock/business transfer. There is also a postponement of share transfers and adjustment of investment patterns. Various formats
Starting from prepayment, the cost of purchasing shares of Impact Green Utility Holding Company Limited (IGU) is 225 million baht (100% of the value of shares purchased). In June 2023, CIG modified its investment model to buy shares in IGU’s holding company instead, which is currently under negotiation, but CIG had already paid for all the shares in February 2023.
From SETSMART News On August 8, 2022, the company informed the Board of Directors of the decision to purchase IGU shares, which was higher than the estimated price of 90 million baht, although the Audit Committee asked for more caution in conducting the transaction.
In the following case, CIG made an advance payment before accepting the transfer of the entire Good Ventures Company Limited business, worth 260 million baht (58% of the business value), by June 2023. Most of the shares were paid in advance. While the entire business transfer will be completed when the company pays the remaining amount of 190 million baht during June 2024.
Place a large security deposit
As for the next case, CIG placed due diligence compensation deposits with several companies, starting with Jay Ling Solution Co., Ltd. (JLS), in the amount of 42 million baht, but in July 2023 the Executive Committee decided to acknowledge that the company (JLS) had suffered losses, making it indirectly exposed to the stock exchange’s listing standards. As for the independent financial advisor, it is recommended to postpone the purchase of JLS shares and they will be presented to the Board of Directors again in the fourth quarter of 2023. However, from SETSMART news dated January 30, 2023, the company informed of the Board of Directors’ decision to request approval from shareholders to own shares in JLS Company. Worth 660 million baht
In addition, CIG has also placed a security deposit to conduct due diligence on four more companies, worth 197 million baht, by July 2023. The Executive Committee decided to acknowledge the postponement of the investment schedule/change of investment format. Originally, the Executive Committee decided to enter into a joint venture agreement and place a security deposit for each company’s due diligence of 50 million baht in February 2023.
Resignation of members of the audit committee
Meanwhile, what raises the stock exchange’s doubts about CIG’s operations is that the company has in the past changed the audit committee several times. At present, the Audit Committee that asked the Executive Committee to be more cautious in the purchase of IGU shares has resigned from the membership of the Audit Committee of the company. All three members of the company currently have two audit committee members who are incomplete accordingly to the requirements regulations. Meanwhile, the company has defaulted on debt under the debt restructuring agreement with an original debt of 19 million baht, which has not yet been disclosed through the stock exchange system in accordance with the standards. .
Adding a new major shareholder
As for CIG, it has been listed on the stock exchange since 2005 with an IPO price of 2.75 baht per share, and considering the current trading price of 0.19 baht per share, it was found to have declined by more than 93%. The management is “Aree Phumsanoh.”
But what is starting to show signs of change at CIG is this Capital increase for existing shareholders (valid offering) which occurred in March. 66 which “Foam Sano Collection” led by “Arisa Fumsanoh” It purchased an additional 306 million shares, representing 17.65% at a price of 0.50 baht per share, for a total of 153 million baht, increasing its shareholding in CIG to 23.68% of the original ownership of 12.10%, while “Terra Fumsano” Purchasing an additional 400 million shares, equivalent to 23.07%, at the same price for a total of 200 million baht, increasing the shareholding in CIG to 24.46% from the original 1.39%.
Shortly after, Terra went public with CIG and sold 400 million shares, or 23.07%, leaving 12 million shares, or 0.69%, remaining. But what was even more surprising was that the price at which the shares were sold was the same as the newly purchased shares, 0.50 baht per share, which made investors even more skeptical.
While the stock buyer of “pace” is “Chanyut Bunyaketu” is a businessman who has never been in the news in the Thai stock market. No one has a clear origin. But acquiring a large stake in CIG is seen by many parties as unusual. It is not clear if this is a personal investment. Or whose representative?
But after the completion of the capital increase, there was a change in the major shareholders. Many parties have turned their attention to this. When a new group of investors comes together, in which direction will CIG run its business?
Because during that time there was news that the company is changing its business direction. Look for new actions to help increase strength. After losing continuously for many years, the company has accumulated up to 913 million baht.
Pay first, STARK style
For several of CIG’s stock prepayment transactions, the auditor made a note. It is considered a large node because it is a transaction that has the same characteristics as Stark Corporation Public Company Limited (STARK), which creates an advance payment transaction for the purchase of goods. To transfer money outside the company
Meanwhile, the money CIG executives received to advance the purchase of shares worth 724 million baht represents 84% of shareholders’ equity. This is because CIG’s shareholder structure consists of 4,248 small shareholders, holding a combined interest of 82.58%, meaning that the money that CIG executives transferred to advance the purchase of shares was almost all small shareholders’ money.
So We issue this announcement to warn investors about the stock exchange and also point out another suspicious sign: the independent directors of this listed company. Move away gradually. If there had been an actual error, the stock exchange’s investigation might have been too late.
He explains that he will not accept the transfer because he is preparing to resell.
For CIG’s interpretation of the stock exchange, it can be concluded that 1. Payment in advance and the purchase price of IGU shares is 225 million baht (100% of the value of the shares purchased). Currently, the company has adjusted its investment model to purchase shares in HALCYONASIA ADVISORS (SINGAPORE) PTE. LTD. (HCYA), the holding company of IGU, which is higher than the estimated price of 90 million baht, and CIG paid all the amount of shares last February 2023
This is because investing in HCYA will help meet the needs of the corporate group that has plans to expand its business abroad. You have the opportunity to find new joint venture partners locally and abroad because most foreign investors are more familiar with Singapore’s laws.
As for not receiving the transfer of HCYA shares yet, this is due to a group of investors interested in joining or investing. Or acquire a HCYA Therefore CIG postponed the transfer to avoid the tax expenses that would occur if the HYCA was sold to a new capital group.
An incomplete fundraiser cannot be paid in full
2. The advance payment before accepting the transfer of the entire Good Ventures business of 260 million baht or 58% of the value of the business was due to the fact that CIG was unable to raise funds from the sale of common shares worth 433.55 million baht as planned. It makes it impossible to transfer the entire business but I have requested a waiver from the seller so I can pay gradually until the amount is complete.
Many deals were canceled and refunds were gradually received
3. Establishing a security deposit for due diligence, CIG explained to each company that in the case of JLS (the security deposit was paid in the amount of 42 million baht), the company was found to have a loss in 2022, which put it at risk until on January 30, 66, the Board of Directors decided He requested shareholder approval for the purchase of JLS shares worth 660 million baht, but later on February 28, 2023, the company announced the cancellation of the shareholder approval request.
Meanwhile, SSS (50 million baht deposit paid) found accounting problems caused by the original group of executives who resigned. This made it impossible to buy the business outright, so it was proposed that SSS and the new group of executives transfer some of the business to GV. Currently, CIG is in the process of recovering the security deposit.
Easy Management Company Limited (deposit paid 47 million baht) is studying the cold storage system design project. This changes the investment style and transaction size. Therefore, additional opinions must be obtained from legal advisors and financial advisors for further consideration and approval.
S. Susom Limited (S. Susom) (deposit paid 50 million baht) is engaged in investing in basic facilities in industrial parks. We must wait for the formation of a new government so that there will be someone responsible for issuing the various licenses. Therefore, the study is expected to be completed during the first quarter of 2024 and Wenner Associates Limited (TWA) (deposit paid 50 million baht) manages the wholesale business of pharmaceutical and medical products. It is a company that supports JLS, and when the purchase of JLS shares was postponed, the purchase of TWA shares was also postponed, and a new board of directors is expected to be proposed in the fourth quarter of 2023.
As a result, CIG expects to recover virtually all of the insurance proceeds paid. By October 2023, only S. Susom is expected to remain, and he is in the process of verifying the accuracy of the information. Following the cancellation of the JLS and TWA acquisitions, Easy Management is seeking additional feedback from consultants, while SSS is in the process of returning the deposit.
However, these clarifications will take some time to prove that CIG will be able to resolve SET’s concerns. Do investors really understand it? Because good examples like STARK have happened before. In the past, if there is no doubt, never ask the exchange about anything casually. Therefore, clarification of the CIG would be of great value. In actual practice for investors today, CIG is considered a “hot” item, so avoid touching it with bare hands. It is likely to be the safest.
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