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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Disclosure EXPO

Disclosure EXPO

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21Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 12:11 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Still I have some reasonable doubts about their action even after reading the  lengthy discussion above (Thanks all who contributed) for two reasons-

(1) If the tender procedure is really transparant (as Alchemist insists) no one has any controle over the selling price and to whome it is to be sold (refer to answers of Al to questions 2 & 3). Then how could EXPO decided to sell it to a family company as Alchemist says.

(2) I remember that, there was a serious error (intentional?) in their prospectus at the IPO (corrected later- too late because by that time many had applied) favouring pre-IPO share owners of some private placement of shares at bargain prices. This eroded their integrity over managing public funds.

?Can any one enlighten me on this.
@ Haputantri - 

Without knowing the full spectrum of facts, it is very difficult for me to explain with details. 

EXPO is essentially a transport / logistics / Freight Company. perhaps they made some strategic blunders and diversified into unrelated business, which they later wanted to rectify. 

Some non core business units in the food sector of EXPO were running at losses and with debts and were a drag to core company's profits. however, these units were run / managed by shareholders & related parties of EXPO majority owners. Thus, a decision was made to transfer to one of their private family owned companies. since some of these companies had a negative net worth, the transfer price was an issue. thus this process which was supervised by the independent directors and conducted by a chartered accountancy firm entailed for tenders / bids as if these companies were to be sold to an outside third party in an "arms length" transaction. 

Perhaps this exercise was to establish an instrinsic value on the businesses, as some of them had a negative net worth. 

i presume EXPO then agreed to transfer to a related party at a price determined at an "arms length" distance which was better that the best bids received. 

i know they transferred these businesses at a higher price (to the bids received) to their own private company, rather than divested it to outside unrelated third party at a lower price, and that from EXPO point of view they have done well.

Re the IPO / Pre IPO price matter - i am not aware of the details. can someone clarrify this please ?

22Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 12:42 pm

K.Haputantri


Co-Admin
Thanks Alchemist for your lenthy explanations on behalf of EXPO.

My question now is, ?are they repeating the same blunders in their private companies too by buying loss making companies they could not run in a listed company profitably paying the highest price.

Or ?were they spending public funds recklessly but are very smart in handling their priate companies.

?Can we call them God fearing people, at least they should have been shareholder fearing people in a public company. This is very strange.

As for the pre-IPO blunder, it was discussed in the following link.
http://forum.srilankaequity.com/t4546-softlogic-the-angel-expo-the-devil-story-of-private-placements?highlight=EXPO+IPO

Almost all retail investors lost substantially because pre-IPO share holders dumped their shares below IPO price making a huge profit. SEC regulation on lock up of private placement shares were in effective because they had other shares which were not locked up and could be sold.

Such IPOs are partly responsible for the current down trend of the CSE.

23Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 1:23 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Thanks Alchemist for your lenthy explanations on behalf of EXPO.

My question now is, ?are they repeating the same blunders in their private companies too by buying loss making companies they could not run in a listed company profitably paying the highest price.

Or ?were they spending public funds recklessly but are very smart in handling their priate companies.

?Can we call them God fearing people, at least they should have been shareholder fearing people in a public company. This is very strange.

As for the pre-IPO blunder, it was discussed in the following link.
http://forum.srilankaequity.com/t4546-softlogic-the-angel-expo-the-devil-story-of-private-placements?highlight=EXPO+IPO

Almost all retail investors lost substantially because pre-IPO share holders dumped their shares below IPO price making a huge profit. SEC regulation on lock up of private placement shares were in effective because they had other shares which were not locked up and could be sold.

Such IPOs are partly responsible for the current down trend of the CSE.
Thanks Hapu for some valid points. 

I feel that what we can discuss about this disclosure thread here, is how they did what they did.
we cannot discuss why they did what they did unless an EXPO Rep (like Melstacorp) comes on the forum or we question on another forum like AGM / EGM etc. 
with my limited info, i can only answer the "how they did" part and weather it is fair and not "why they did " part and weather that was unfair. none of us except EXPO themselves can answer that, which the first part of your question queries. 

On the IPO / PP issue, i read the attached linked thread. I still do not see any point of contention in this. Subscribers subscribed to the IPO knowing fully well that a Price Placement had occurred 6-8 months ago at a substantial discount. they did so at the height of a Bull Market driven by greed ? No one forced them to subscribe ? If subscribers felt there was marked disparity between the issue price (ipo) and PP price, they should not have subscribed. then when bear market comes later, and the price halves, is it fair to blame them ? if the Bull market continued and EXPO went up 50 % from IPO price, would the same sentiments be expressed ? If the SEC messed up with the Lock In period issue, can we blame EXPO ?

Just some points to ponder, as sometimes, things look different in hindsight.

24Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 1:37 pm

K.Haputantri


Co-Admin
The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.

I heard a recent amendment to this trying to plug the hole.

25Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 3:46 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.

I heard a recent amendment to this trying to plug the hole.
Thanks for the link. 

The question is, is it fair to blame EXPO for perhaps profiting from a SEC Loophole ? should'nt fair blame be apportioned to SEC & JK lead Managers for IPO mispricing, lock in period etc ?

Yes, the Prospectus issue at first glance seems like a shocker ! i missed all this action, it seems, as i was overseas between feb - june 2011 :-) however, i just had a look at prospectus / errata notice etc, and on closer examination, i discovered the following -

1. IPO opened on 12th May 2011. Errata notice was dated 5th May 2011. one week before IPO date not sufficient disclosure time ?

2. On page 100 note 6.1 of IPO prospectus, it is shown the holdings in Expo Aviation & Denshun were 0 % as at 31st December 2010 down from 100 % - 90 % as at 31st March 2010. The valuation amount is as per the errata notice. therefore, it is obvious it is not intentional isnt it ? it has to be an error. only if you have not read page 100 note 6.1 properly will you feel that the errata disclosure is intentionally omitted form prospectus.  

3. Expo been allowed to play with public funds issue does not arise. There was an Offer, there was Acceptance (Over subscription) and the Consideration price was the IPO price of Rs 14. A solid Contract. end of story.  

whether we lost or gained, whether SEC & JK Managers dropped the ball on the EXPO ipo, i feel not fair to blame Expo.

26Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 5:49 pm

K.Haputantri

K.Haputantri
Co-Admin
If a person is God fearing he should never ever creep through loop-holes and earn undue profits. Its like outright fleecing of the gullible retailers. The application of the concept of Offer & Acceptance in contract law in CSE is prematured because, Sri Lankan retailers are not that educated to do due deligance when investing in an IPO. That is why SEC is conducting classes to educate them. Much awaited amendment to rules were published only today.

http://forum.srilankaequity.com/t31532-sec-amendments-to-listing-rules#185748

At last the loop-hole has been plugged.



Last edited by K.Haputantri on Fri Nov 08, 2013 8:54 am; edited 1 time in total

27Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 7:26 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:If a person is God fearing he should never ever creep through loop-holes and earn undue profits. Its like outright fleecing of the gulliable retailers.
Hapu Sir, with all due respect, what  i am trying to say is that the concept or thought of loop-holes and undue profits was never there in real time in May 2011, the IPO time. only now over 2 years later, looking back, we feel that no lock in period rule is unfair and was a loop hole and that is because of what happened during some IPO''s in 2011. same with undue profits. at that time nobody questioned the pricing of the IPO and happily subscribed. It is only now over 2 years later when the price is half the IPO price that we are saying that EXPO owners earned undue profits due to pricing and retailers got fleeced.   

the point i'm trying to make is that we are judging these events much later, in hindsight, and casting judgments on events that were considered fair at that time i.e. may 2011. 

The IPO was supervised by SEC, Placed by JK etc and endorsed by JKH & Carsons who are major shareholders todate. If nobody thought it was fair at that time, why was issue so oversubscribed ?
we only judge it to be unfair now, due to various other events, in hindsight. 

Human nature in share trading is such that when things go wrong in hindsight, we feel that we have been fleeced and were gullible. But when things go right in the market, we wont stop for a second and think that perhaps somebody (the seller whom we bought it from) may have gotten fleeced !

In the EXPO case, for eg, if the share was Rs 30 today, will it be fair for Expo owners who sold their shares at Rs 14 in the IPO to feel that they were fleeced by retailers ?

28Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 7:37 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@The Alchemist wrote:
@K.Haputantri wrote:If a person is God fearing he should never ever creep through loop-holes and earn undue profits. Its like outright fleecing of the gulliable retailers.
Hapu Sir, with all due respect, what  i am trying to say is that the concept or thought of loop-holes and undue profits was never there in real time in May 2011, the IPO time. only now over 2 years later, looking back, we feel that no lock in period rule is unfair and was a loop hole and that is because of what happened during some IPO''s in 2011. same with undue profits. at that time nobody questioned the pricing of the IPO and happily subscribed. It is only now over 2 years later when the price is half the IPO price that we are saying that EXPO owners earned undue profits due to pricing and retailers got fleeced.   

the point i'm trying to make is that we are judging these events much later, in hindsight, and casting judgments on events that were considered fair at that time i.e. may 2011. 

The IPO was supervised by SEC, Placed by JK etc and endorsed by JKH & Carsons who are major shareholders todate. If nobody thought it was fair at that time, why was issue so oversubscribed ?
we only judge it to be unfair now, due to various other events, in hindsight. 

Human nature in share trading is such that when things go wrong in hindsight, we feel that we have been fleeced and were gullible. But when things go right in the market, we wont stop for a second and think that perhaps somebody (the seller whom we bought it from) may have gotten fleeced !

In the EXPO case, for eg, if the share was Rs 30 today, will it be fair for Expo owners who sold their shares at Rs 14 in the IPO to feel that they were fleeced by retailers ?
Well said mate.
Greed blind then, now loss make us to look for a scapegoat. Human nature.

29Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 9:25 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
This is not to offend you mate, but are u a related party of EXPO trying to support their shaky activities?

Company with good directors follow good company ethics, EXPO clearly didn't have any good ethics with their IPO. (may be public lost money because they were not smart)

If expo really wanted to do an ethical genuine sale of their companies, they would done it in a more transparent way but as it stands many people don't know any info about it.

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/expolanka_commodities.aspx

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/lanka_premier_foods.aspx

Even Net assets would be very high!!!!!!!!!!!!!!!!!!!

@The Alchemist wrote:
@K.Haputantri wrote:If a person is God fearing he should never ever creep through loop-holes and earn undue profits. Its like outright fleecing of the gulliable retailers.
Hapu Sir, with all due respect, what  i am trying to say is that the concept or thought of loop-holes and undue profits was never there in real time in May 2011, the IPO time. only now over 2 years later, looking back, we feel that no lock in period rule is unfair and was a loop hole and that is because of what happened during some IPO''s in 2011. same with undue profits. at that time nobody questioned the pricing of the IPO and happily subscribed. It is only now over 2 years later when the price is half the IPO price that we are saying that EXPO owners earned undue profits due to pricing and retailers got fleeced.   

the point i'm trying to make is that we are judging these events much later, in hindsight, and casting judgments on events that were considered fair at that time i.e. may 2011. 

The IPO was supervised by SEC, Placed by JK etc and endorsed by JKH & Carsons who are major shareholders todate. If nobody thought it was fair at that time, why was issue so oversubscribed ?
we only judge it to be unfair now, due to various other events, in hindsight. 

Human nature in share trading is such that when things go wrong in hindsight, we feel that we have been fleeced and were gullible. But when things go right in the market, we wont stop for a second and think that perhaps somebody (the seller whom we bought it from) may have gotten fleeced !

In the EXPO case, for eg, if the share was Rs 30 today, will it be fair for Expo owners who sold their shares at Rs 14 in the IPO to feel that they were fleeced by retailers ?

30Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 9:41 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
aberdeen holdings (pvt) ltd was incorporated some where in 2011/2012(i'm not sure but i think so).

Now only their website is being constructed
http://www.aberdeenholding.com

Next, it will be IPO of aberdeen holdings (pvt) ltd.
(what a way to raise money!!! - buy few companies at a cheap rate from related but public owned entity, then go for IPO at a high price )

There are common director in expolanka holdings and in aberdeen holding (Pvt) Ltd. But in EXPO annual report it is not mentioned. They are mentioning the name of the other companies in which they are directors but they DO NOT TALK ABOUT aberdeen in the annual report

31Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 9:44 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
Check out the registered company name at this site
http://www.drc.gov.lk/App/comreg.nsf?Open

Where is Aberdeen Holdings?

32Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 10:40 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ccsentha wrote:This is not to offend you mate, but are u a related party of EXPO trying to support their shaky activities?

Company with good directors follow good company ethics, EXPO clearly didn't have any good ethics with their IPO. (may be public lost money because they were not smart)

If expo really wanted to do an ethical genuine sale of their companies, they would done it in a more transparent way but as it stands many people don't know any info about it.

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/expolanka_commodities.aspx

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/lanka_premier_foods.aspx

Even Net assets would be very high!!!!!!!!!!!!!!!!!!!
i am not offended. i am not even a shareholder. i am not a related party of EXPO. in fact, today is the first time i have mentioned expo on forum ! 
best thing for you is to go for the next AGM (if you are a shareholder) and get clarrifications.   
as for company ethics, i doubt JKH will become shareholders in any "shaky activity " companies.
btw, did you apply for the IPO ?

33Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 10:56 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@The Alchemist wrote:
@ccsentha wrote:This is not to offend you mate, but are u a related party of EXPO trying to support their shaky activities?

Company with good directors follow good company ethics, EXPO clearly didn't have any good ethics with their IPO. (may be public lost money because they were not smart)

If expo really wanted to do an ethical genuine sale of their companies, they would done it in a more transparent way but as it stands many people don't know any info about it.

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/expolanka_commodities.aspx

http://www.expolanka.com/expo_lanka/international_trading_manufacturing/lanka_premier_foods.aspx

Even Net assets would be very high!!!!!!!!!!!!!!!!!!!
i am not offended. i am not even a shareholder. i am not a related party of EXPO. in fact, today is the first time i have mentioned expo on forum ! 
best thing for you is to go for the next AGM (if you are a shareholder) and get clarrifications.   
as for company ethics, i doubt JKH will become shareholders in any "shaky activity " companies.
btw, did you apply for the IPO ?
No, I do not own EXPO.

34Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Thu Nov 07, 2013 11:11 pm

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
@ccsentha wrote:

There are common director in expolanka holdings and in aberdeen holding (Pvt) Ltd. But in EXPO annual report it is not mentioned. They are mentioning the name of the other companies in which they are directors but they DO NOT TALK ABOUT aberdeen in the annual report
If it's not a subsidiary then you don't have to mention the directorship. In that case there are lots of directors in most of the major listed companies who are also directors in several of the unrelated companies.

35Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 9:02 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@Jake Sully wrote:
@ccsentha wrote:

There are common director in expolanka holdings and in aberdeen holding (Pvt) Ltd. But in EXPO annual report it is not mentioned. They are mentioning the name of the other companies in which they are directors but they DO NOT TALK ABOUT aberdeen in the annual report
If it's not a subsidiary then you don't have to mention the directorship. In that case there are lots of directors in most of the major listed companies who are also directors in several of the unrelated companies.
It's not mandatory, but almost every company mentions the other directorship held by their companies, EXPO too have done like that, they have mentioned softlogic, AMSL, ASIR, lanka tiles, vpel, etc.. like that many other companies as their directors are holding positions in those companies too, but they don't mention anything about Aberdeen, when they talk about 3rd party companies and then not mention their associate company it doesn't sound right!!!!

36Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 9:49 am

K.Haputantri

K.Haputantri
Co-Admin
Alchemist & Red, I have no reason to disagree with what you said about human nature of greed. Yes, the whole market economy is driven by greed for profits, but there are laws to obey which separates the human beings from all other beings.

Where laws fail, regulations are enforced by respective authorities. Where regulations are not effective, custioms fill-in the gaps, as a temporary measure and later on, it may be regularised by laws.

Moral and Religious principles are in the background of all laws and regulations. Hence, what-ever loop-hole left behind by laws need to be taken care of by moral & religious principles.

There is nothing wrong with critically examining an event even after 10 years, because those who are new should know the truth and offenders should be taken care of even belatedly irrespective of their status. Remember, Criminal cases have no time bar.

I see similarities between a Pump & Dump exercises and the EXPO IPO issue. Here, the share offer price (which I think not a fair-price) was justified by IPO related advertisements, promotional material, and in getting involved "reputed" companies like JK to instill reliability. Here, the "Fair price" was calculated using conventional means used by accountants all other past events ignored. Even though pre-ipo private placement price was Rs:6.00 per share, which would have had a tremendous influance on the post IPO price, all the pundiths ignored it when recomending the "Fair Price." In fact, the prospectus should have highlighted this price sensitive information under "Risks" also but there was no such statement except a record on the pre-ipo issues separately. This is a delibarate action by the company and the promoters.

Hence, here is a clear case of Pumping the share price at the IPO exercise intending to Dump them on gullible investors, who, of course, according to law, are expected to exercise due deliance (A concept alient to many retailers in this country).

I know one would say that no one forced any one to buy the share (offer & acceptance theory) but the market sentiments at that time was so ir-resistible and many parted with their hard earned money owing to Greed.
 
If greed is sin, lurring innocent to part with their money using the greed is a sever sin. The regulator has an obligation to look at this Pump & Dump case even belatedly. It has been a very usefull discussion. Thank all members who contributed very professionally.

37Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 10:55 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
I agreed with your ethics.
But we need to understand that loop holes were purposely made by the law makers to feed their supporters.
Even with the new amendment, if they want to play they can.
We can cry for ever.

38Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 1:09 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@K.Haputantri wrote:Alchemist & Red, I have no reason to disagree with what you said about human nature of greed. Yes, the whole market economy is driven by greed for profits, but there are laws to obey which separates the human beings from all other beings.

Where laws fail, regulations are enforced by respective authorities. Where regulations are not effective, custioms fill-in the gaps, as a temporary measure and later on, it may be regularised by laws.

Moral and Religious principles are in the background of all laws and regulations. Hence, what-ever loop-hole left behind by laws need to be taken care of by moral & religious principles.

There is nothing wrong with critically examining an event even after 10 years, because those who are new should know the truth and offenders should be taken care of even belatedly irrespective of their status. Remember, Criminal cases have no time bar.

I see similarities between a Pump & Dump exercises and the EXPO IPO issue. Here, the share offer price (which I think not a fair-price) was justified by IPO related advertisements, promotional material, and in getting involved "reputed" companies like JK to instill reliability. Here, the "Fair price" was calculated using conventional means used by accountants all other past events ignored. Even though pre-ipo private placement price was Rs:6.00 per share, which would have had a tremendous influance on the post IPO price, all the pundiths ignored it when recomending the "Fair Price." In fact, the prospectus should have highlighted this price sensitive information under "Risks" also but there was no such statement except a record on the pre-ipo issues separately. This is a delibarate action by the company and the promoters.

Hence, here is a clear case of Pumping the share price at the IPO exercise intending to Dump them on gullible investors, who, of course, according to law, are expected to exercise due deliance (A concept alient to many retailers in this country).

I know one would say that no one forced any one to buy the share (offer & acceptance theory) but the market sentiments at that time was so ir-resistible and many parted with their hard earned money owing to Greed.
 
If greed is sin, lurring innocent to part with their money using the greed is a sever sin. The regulator has an obligation to look at this Pump & Dump case even belatedly. It has been a very usefull discussion. Thank all members who contributed very professionally.
I do agreed with you 100%

39Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 3:10 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ccsentha wrote:
@Jake Sully wrote:
@ccsentha wrote:

There are common director in expolanka holdings and in aberdeen holding (Pvt) Ltd. But in EXPO annual report it is not mentioned. They are mentioning the name of the other companies in which they are directors but they DO NOT TALK ABOUT aberdeen in the annual report
If it's not a subsidiary then you don't have to mention the directorship. In that case there are lots of directors in most of the major listed companies who are also directors in several of the unrelated companies.
It's not mandatory, but almost every company mentions the other directorship held by their companies, EXPO too have done like that, they have mentioned softlogic, AMSL, ASIR, lanka tiles, vpel, etc.. like that many other companies as their directors are holding positions in those companies too, but they don't mention anything about Aberdeen, when they talk about 3rd party companies and then not mention their associate company it doesn't sound right!!!!
@ccsentha - again, you miss the point entirely my friend. and your also not making any sense in your argument. read again. also note AR date & transaction date. Just bcos Aberdeen has common directors with EXPO, if there is no related party transactions as at AR date, then no need for disclosure. Their is no need for EXPO to disclose anything about a private unlisted company aberdeen, just bcos of a common shareholding, directorate, if there are no related party transactions, and there may have being none, as at AR date.

40Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Fri Nov 08, 2013 3:56 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Alchemist & Red, I have no reason to disagree with what you said about human nature of greed. Yes, the whole market economy is driven by greed for profits, but there are laws to obey which separates the human beings from all other beings.

Where laws fail, regulations are enforced by respective authorities. Where regulations are not effective, custioms fill-in the gaps, as a temporary measure and later on, it may be regularised by laws.

Moral and Religious principles are in the background of all laws and regulations. Hence, what-ever loop-hole left behind by laws need to be taken care of by moral & religious principles.

There is nothing wrong with critically examining an event even after 10 years, because those who are new should know the truth and offenders should be taken care of even belatedly irrespective of their status. Remember, Criminal cases have no time bar.

I see similarities between a Pump & Dump exercises and the EXPO IPO issue. Here, the share offer price (which I think not a fair-price) was justified by IPO related advertisements, promotional material, and in getting involved "reputed" companies like JK to instill reliability. Here, the "Fair price" was calculated using conventional means used by accountants all other past events ignored. Even though pre-ipo private placement price was Rs:6.00 per share, which would have had a tremendous influance on the post IPO price, all the pundiths ignored it when recomending the "Fair Price." In fact, the prospectus should have highlighted this price sensitive information under "Risks" also but there was no such statement except a record on the pre-ipo issues separately. This is a delibarate action by the company and the promoters.

Hence, here is a clear case of Pumping the share price at the IPO exercise intending to Dump them on gullible investors, who, of course, according to law, are expected to exercise due deliance (A concept alient to many retailers in this country).

I know one would say that no one forced any one to buy the share (offer & acceptance theory) but the market sentiments at that time was so ir-resistible and many parted with their hard earned money owing to Greed.
 
If greed is sin, lurring innocent to part with their money using the greed is a sever sin. The regulator has an obligation to look at this Pump & Dump case even belatedly. It has been a very usefull discussion. Thank all members who contributed very professionally.
Thank you Hapu. you are a ethically & morally righteous man. respect.  

However, sorry i have to respectfully disagree almost entirely on many of your assertions on this thread. legally, ethically or even morally, your arguments violate basic principles of natural justice, and are filled with bias and prejudice.

your basic arguments are 

1. Prospectus error - criminal 
2. IPO price - not fair
3. "loophole" - no lock in period 
4. IPO was an pump & dump 

1. I have clearly demonstrated that the prospectus error must have had to be accidental. and was disclosed one week before IPO. you have not replied to that. so criminal charges should be dropped as it was not intentional.  

2. IPO price - again, i have repeatedly told you that this is a biased & prejudiced view looked at only with hindsight. the private placement price, information, knowledge was well disseminated and there was an active grey market for many months between PP & IPO. there was no unjust enrichment of Expo at the expense of anyone. it only appears like that now when price is down. you have not replied whether today if Expo price is Rs 30, whether it would be fair for owners of Expo to feel that they were fleeced by retailers.     

3. Loophole - no lock in period concept or anything like that existed at the time of the IPO. new lock in period laws came up after these 2011 IPO's as a result of a perception that arose after the fact. not legally, ethically or morally right to judge EXPO on this account. IPO subscribers would have known the implication of subscribing with the PP factor. The Expo Directors did not sell after the IPO.  

4. IPO was a pump and dump - conspiracy theories only come with bias & prejudice. there was an offer & acceptance. subsequently, the expo owners they did dump shares in the market. 

Yes, i agree with you that in your own words, that it was an irresistable time. there were gullible people. greed played a great role. the lure was intense. since you mentioned religious laws and the role they have to play, it is apt to remember Lord Buddha and what he had to say on Greed, Attachment, Craving, Delusion, as ironically, they all seemed to have played their part in this whole expo drama.       
Kindly please take in good spirit.



Last edited by The Alchemist on Fri Nov 08, 2013 8:31 pm; edited 1 time in total (Reason for editing : Owenr)

41Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Sat Nov 09, 2013 1:21 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@The Alchemist wrote:
@ccsentha wrote:
@Jake Sully wrote:
@ccsentha wrote:

There are common director in expolanka holdings and in aberdeen holding (Pvt) Ltd. But in EXPO annual report it is not mentioned. They are mentioning the name of the other companies in which they are directors but they DO NOT TALK ABOUT aberdeen in the annual report
If it's not a subsidiary then you don't have to mention the directorship. In that case there are lots of directors in most of the major listed companies who are also directors in several of the unrelated companies.
It's not mandatory, but almost every company mentions the other directorship held by their companies, EXPO too have done like that, they have mentioned softlogic, AMSL, ASIR, lanka tiles, vpel, etc.. like that many other companies as their directors are holding positions in those companies too, but they don't mention anything about Aberdeen, when they talk about 3rd party companies and then not mention their associate company it doesn't sound right!!!!
@ccsentha - again, you miss the point entirely my friend. and your also not making any sense in your argument. read again. also note AR date & transaction date. Just bcos Aberdeen has common directors with EXPO, if there is no related party transactions as at AR date, then no need for disclosure. Their is no need for EXPO to disclose anything about a private unlisted company aberdeen, just bcos of a common shareholding, directorate, if there are no related party transactions, and there may have being none, as at AR date.
You didn't get my point. I'm not talking about the market disclosures. I'm talking about the directors brief description in the annual report. I never said that this is mandatory.
By the way I'm not new to the share market.

42Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Sat Nov 09, 2013 10:33 am

K.Haputantri

K.Haputantri
Co-Admin
Alchemist, you have not properly understood what I said. What is criminal not the prospectus error. It is the intentional use of EXPO IPO for pump & dump which is criminal. Now that the submissions of the defense is closed I do not want to reopen the case. Let the jury give their opinion.

43Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Sat Nov 09, 2013 11:55 am

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Alchemist, you have not properly understood what I said. What is criminal not the prospectus error. It is the intentional use of EXPO IPO for pump & dump which is criminal. 

On thurs 7th Nov at 3.46 pm
K.Haputantri wrote:
The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.

44Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Sat Nov 09, 2013 12:23 pm

K.Haputantri

K.Haputantri
Co-Admin
@The Alchemist wrote:
@K.Haputantri wrote:Alchemist, you have not properly understood what I said. What is criminal not the prospectus error. It is the intentional use of EXPO IPO for pump & dump which is criminal. 
On thurs 7th Nov at 3.46 pm
K.Haputantri wrote:
The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.
Yes, the word crime was used in my comment on the 7th inadvertantly, but on 8th instant I was referring to your comment on the same day where I dealt with the criminal act of Pump & Dump in detail. Got it?

45Disclosure EXPO - Page 2 Empty Re: Disclosure EXPO Sat Nov 09, 2013 1:04 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:
@The Alchemist wrote:
@K.Haputantri wrote:Alchemist, you have not properly understood what I said. What is criminal not the prospectus error. It is the intentional use of EXPO IPO for pump & dump which is criminal. 
On thurs 7th Nov at 3.46 pm
K.Haputantri wrote:
The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.
Yes, the word crime was used in my comment on the 7th inadvertantly, but on 8th instant I was referring to your comment on the same day where I dealt with the criminal act of Pump & Dump in detail. Got it?
Yes, a pump and dump is a criminal act. to refer to the EXPO IPO as a Pump & Dump has no legal, moral or ethical basis. it is an malicious, arbitrary assumption arrived at with bias & prejudice
after the fact, purely based on current price vs ipo price.  

in other words, if EXPO share was trading at Rs 30, we would not be having this debate, would we ? Since the Directors / Owners of EXPO, did not sell there shares after the IPO (Dump), The loophole / no lock in period clause does not arise, as even if their was no loophole i.e. lock in period was there, they did not violate it since they did not sell their shares after the ipo.
The Pump did not arise as there was a prospectus and there was no manipulation of offer price. there was offer & acceptance. the consideration price at that time seemed fair to all parties.
only now, just bcos the market came down subsequently and therefore the price of EXPO has halved, it is unfair to refer now to ipo price then as a pump & dump.

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