Saturday 20 Apr 2024
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Zavarco_Company-Structure_Share_20_deW004_theedgemarketsA bitter dispute is understood to be ongoing among shareholders of Zavarco plc (formerly known as Vasseti UK plc), a company previously listed on the Frankfurt stock exchange whose mainstay is in the telecommunications business.

On one side are colourful corporate personality Tan Sri Syed Mohd Yusof Syed Nasir, who has a 24% stake and is a former director of Zavarco, and former managing director Ranjit Singh Sidhu. On the opposing side are officials linked to VCB AG — which has 30% equity interest in Zavarco — including Roslina Ibrahim, who is stated as a director in the company’s last annual report, for 2013.

VCB is linked to local fund VCB Capital Sdn Bhd, whose website says Roslina is CEO. VCB Capital is wholly owned by VCB Malaysia, which is controlled by Roslina (60%) and Abd Hadi Abd Majid (40%) via their vehicle BVS Trinity Sdn Bhd. According to Zavarco’s 2013 annual report, Roslina was appointed to the board in November 2013, but this is not stated on Zavarco’s website now.

Several suits are understood to have been filed and some of them are ongoing, but details, including court documents, are not easy to come by.

“There are at least seven [suits], but there could be more,” a source familiar with the matter tells digitaledge Weekly, as to the number of suits filed.

Another name that has surfaced in the tussle is that of Shailen Gajera. When met at Zavarco’s annual general meeting at KL Sentral on Aug 14, Gajera, however, said his role was merely an advisory one. VCB Capital’s website lists him as a compliance officer.

When contacted a couple of weeks ago, Syed Yusof, whom the annual report says was “not re-elected” to the board in February 2014, said he would speak to digitaledge Weekly “when the time is right”. He added that he was not involved in the running of the company and was only a shareholder.

Ranjit, who resigned from Zavarco on July 8, 2013, meanwhile, asked digitaledge Weekly to speak to someone in Zavarco, as he is no longer with the company.

Roslina, when contacted by digitaledge Weekly, said she would “think about it”, before hanging up.

According to Zavarco’s website, apart from VCB and Syed Yusof, the other shareholders are Vidacos Nominees Ltd (18.4%), HSBC Client Holdings Nominee (UK) Ltd (10%), Jim Nominees Ltd (7.7%), Chase Nominees Ltd (3.3%) and European Caribbean Financial Group Ltd (3.1%).

Zavarco was suspended from trading on April 9 and delisted on May 22. According to a notice on its website, among the reasons for the delisting is that “the board has detected some irregularities in the financial management of the company and its subsidiaries, leading to issuance of a ‘qualified’ financial statement for 2013 for the company and its subsidiary Zavarco Bhd”.

“In addition, the alleged wrongful issue of some shares by the company to shareholders and whether some shares are paid up or not are the subject of investigation by the company, as well as a number of claims in both the Malaysian and English High Courts,” it says.

Another reason is that the company is not generating any meaningful income to sustain its operations, especially considering its annual listing cost amounted to €38,000 (RM172,000).

When Zavarco was suspended from trading and eventually delisted, the stock was trading at a mere €0.015, compared with €1.05 when the shares were first floated in August 2011.

Zavarco’s two main assets are a golf course and country club, and a telecommunications business.

For the year ended December 2013, it suffered a net loss of RM7.2 million on revenue of RM67.7 million.

Interestingly enough, Zavarco’s auditors UHY Hacker Young LLP of the UK gave a qualified opinion on the financial statements, saying that the audit evidence available was limited, as certain directors had resigned that year, and the current directors and auditors were unable to obtain access to bank statements and accounts.

UHY also said that in the financial statements, there were two amounts — RM8.9 million and RM29 million — due to former directors that were in dispute, and legal opinions had been sought.

It added that Zavarco’s management control of its 51% subsidiary Kyowa Kanko Kaihatsu (M) Bhd (KKK), which operates the Templer Park Country Club in Rawang, was compromised, resulting in the existing management being unable to access the audited accounts or management accounts of the company, among others.

In the annual report, it is stated that the board was made aware on Jan 2, 2014, of a potential dilution of the company’s interest in KKK, occurring by way of an issuance of 3.1 million new KKK shares.

Zavarco says, “The board shall initiate an investigation on this matter.”

In March the same year, the company received a writ of summons from Kyowa Kanko Kaihatsu Co Ltd of Japan, “demanding the return of all Zavarco’s interest in KKK”, which is the 51% equity interest.

Zavarco, in turn, says it has “appointed a law firm to attend to this matter”.

A check in Zavarco’s annual report for 2012 reveals that the company had acquired a 51% stake in KKK for RM1 (but did not state from whom it was acquired from), but it had also assumed its share of the liabilities amounting to RM4.8 million.

For its six months ended June last year — the last of its financials on its website — Zavarco registered a net profit of RM3.3 million on the back of RM48.5 million in revenue.

While the relatively small profit seems unlikely to motivate seven suits, the source says that at the heart of the tussle is Aries Telecoms (M) Bhd (formerly known as V Telecoms Bhd). A check on the Companies Commission of Malaysia’s (CCM) website shows that until the financial year ended December 2013, Aries Telecoms was an 81.9% unit of Zavarco, but was more recently reported to be controlled by privately held Open Fibre Sdn Bhd.

It is unclear how Open Fibre came to control Aries Telecoms.

As at end-2013, Open Fibre was a 3.9% shareholder in Aries Telecoms. Another shareholder was Pan Eagle Holdings Bhd (8.2%), which is linked to Open Fibre and its directors Zulizman Zainal Abidin and Wan Alias Wan Ngah @ W Yahya. Wan Alias, Ranjit and one Mona Ezreen Md Sofri held insignificant stakes in Open Fibre as at end-2013.

In its year ended December 2013, Open Fibre suffered an after-tax loss of almost RM1.4 million, without any revenue. It had current assets amounting to RM398.7 million and non-current assets of just over RM50 million. The company had long-term debt commitments of RM54.1 million.

As at end-2013, Open Fibre’s other shareholders were China Finance Ltd (37.3%), Arab Emirates Capital (37.3%), Primawin Ltd (23.9%) and Zulizman (1%). Ku Hasniza Hani Ku Hashim and Ranjit had negligible stakes.

 

Aries Telecoms, the jewel in the crown

According to CCM, Aries Telecoms posted an after-tax profit of RM11.8 million on revenue of RM62.8 million in its financial year ended December 2013.

While it might not seem like a lot to fight over, Aries Telecoms is stated to have non-current assets in excess of RM1 billion and current assets of RM42.6 million. It had RM413.2 million in long-term borrowings, RM61.9 million in short-term borrowings and RM83.5 million in reserves.

Aries Telecoms also has a RM400 million credit facility from Bank Pembangunan from end-June 2012, according to the CCM filings.

In mid-June 2015, in an announcement by the Alternative Investment Market (AIM) in London “prior to its admission”, Aries Telecoms plc, which is incorporated in Jersey, is the holding company of Aries Telecoms (M) Bhd, the company’s wholly-owned Malaysian operating subsidiary.

It is stated that “the group owns and operates Malaysia’s first nationwide carrier class metropolitan area network that is based on ethernet standards, which runs over end-to-end fibre-optic infrastructure”.

“The group’s ethernet solutions include a range of cost-effective, reliable and scalable network products facilitating data transport speeds from 1Mbps to 10Gbps, specifically targeted at the wholesale business market. Its nationwide network spans more than 5,000km across Peninsular Malaysia, with plans to expand its services regionally in Southeast Asia to countries such as Thailand, Singapore and Laos.”

Roslina is stated as the chief financial officer of Aries Telecoms plc in the AIM one pager, and the company is said to be wholly owned by Vertu Capital Ltd.

Vertu Capital is traded on the London Stock Exchange’s main market, and according to its website, it was “formed to undertake an acquisition of a target company or business in the financial services sector, including (but not to the exclusion of other types of businesses) fund management businesses, niche investment banks, trustee and custodian service businesses and financial planning businesses”.

It was listed in January this year.

According to Bloomberg, Vertu Capital’s major shareholders are Nordic Alliance Holdings Ltd (20%), Amber Oak Holdings Ltd, Belldom Ltd, Eastman Ventures, Infinity Mission Ltd and Link Summit Ltd (10% each).

Considering William Du Kiat Wai is a director of Vertu Capital, it is likely that his Ingenious Growth Fund is a shareholder of Vertu Capital.

Vertu Capital has a market capitalisation of just over £1 million (RM6.41 million).

However, a check on CCM’s website reveals that most of the details on the companies involved such as Open Fibre have not been updated. Otherwise, the information could have lent some clarity to the issues.

 

This article first appeared in digitaledge Weekly, on August 24 - 30, 2015.

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