KUALA LUMPUR (Jan 15): The Securities Commission Malaysia (SC) has raised a red flag over the conduct of Nexgram Holdings Bhd in disposing of three of its subsidiaries.

In a statement today, the SC said it has come to the regulator's attention that Nexgram Holdings, which is making a voluntary takeover offer for the securities of Ire-Tex Corp Bhd, had entered into agreements this month, to dispose of three of its subsidiaries.

This came after the SC had cleared the takeover offer document on Dec 10, 2015, which was despatched to the holders of Ire-Tex securities on Dec 11, 2015. Nexgram Holdings had on Nov 20, 2015 made the take-over bid for Ire-Tex securities.

The three subsidiaries are Nexgram Resources Sdn Bhd, Godynamic Investments Ltd and PT Semesta Tirta Antara Raya (Indonesia).

The SC also pointed out that Bursa Malaysia is in the process of seeking verification from Nexgram Holdings on the existence of certain assets belonging to these subsidiaries.

"The disposals were announced by Nexgram Holdings on Jan 11 and 12 respectively. These subsidiaries are also subject to an on-going enquiry, conducted by the SC in relation to the accuracy of information disclosed in the offer document," it added.

The SC said the conduct of Nexgram Holdings in disposing the subsidiaries, delays and obstructs the on-going enquiries by the SC and Bursa Malaysia.

"The outcome of these enquiries may have a material impact on the value of Nexgram Holdings shares, which holders of Ire-Tex securities are to receive in exchange for accepting the voluntary offer," it warned.

Under the takeover bid, Nexgram is proposing to acquire Ire-Tex securities via an equity swap arrangement at an offer price of 40 sen per share.

It is also offering to acquire all its outstanding warrants and irredeemable convertible unsecured loan stock (ICULS) at one sen per outstanding warrant, and 5 sen per ICULS.

The offer price shall be satisfied through the issuance of new shares in Nexgram Holdings at an issue price of 10 sen each. Currently, it does not own any stake in Ire-Tex.

Hence, each holder of Ire-Tex shares will get four Nexgram Holdings shares for every one Ire-Tex share surrendered, one Nexgram Holdings share for every 10 warrants surrendered, and one Nexgram Holdings share for every two ICULS surrendered.

Earlier today, Nexgram Holdings’ founder Datuk Tey Por Yee was charged at the Ampang Sessions Court for a case that may involve RM68 million fraud, and false declaration.

It was reported that Tey, who is also the former chief executive of Nexgram Holdings, claimed trial to both charges.

Tey pleaded not guilty to both charges, which involved misleading board members of Protasco Bhd in acquiring PT Anglo Slavic Utama Indonesia for US$22 million (RM68 million then).

Anglo Slavic is an oil and gas company, which Tey has vested interest.

The second charge alleged Tey to have made false statutory declaration before Wern Li Morsingh, a Commissioner of Oaths, that he had no interest in Anglo Slavic.

At the Session Court today, Judge Rushan Lutfi Mohamed set bail at RM1 million and ordered Tey to surrender his passport. The court also fixed Feb 24 for mention.

Nexgram Holdings shares fell half sen or 5.56% to 8.5 sen today, emerging as the second most actively-traded counter, with some 48.90 million shares done. Its market capitalisation stood at RM169.3 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)