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Mercantile Ports & Logistics - slam dunk sell (target 0p) as Nomad Cenkos (again) brings AIM into disrepute

By Tom Winnifrith | Friday 21 April 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Nomad Cenkos was repeatedly warned by myself and others about the fraud at Quindell (QPP). It banked fees of more than £12 million and did nothing to stop the wrongdoing. In doing so it brought AIM into massive disrepute. Now there is evidence that it is turning a blind eye to horrific red flags at Mercantile Ports & Logistics, which at 8.5p is capitalised at £32 million. My target price is 0p but what the hell is Cenkos playing at? I break my break to deal with the errant Nomad - I have a score to settle here since some of the money it raised for the Quenron fraud was used to harass me with fascist lawyers letters..

Cenkos has been repeatedly warned by a shareholder with industry experience of issues. Massive questions about the probity of the Executive Chairman Nikhil Gandi can be found on the internet. Yet Cenkos does nothing except raise vast sums to be thrown down a bottomless pit. I put it to you that Cenkos Securities is bringing AIM into total disrepute yet will AIM bother to slam an establishment player like Lagos Securities?

So what are the problems here. I am indebted to a poster on ADVFN who is responsible for much that follows.

Less than 24 months ago, highly respected Sunny Varkey, the billionaire education entrepreneur and philanthropist, and Unesco Goodwill Ambassador served writs on former Everonn Education directors Nikhil Gandhi and P Kishore(MD) in connection with siphoning off huge sums of funds from Everonn, then controlled by Sunny.

Sunny filed two police complaints, alleging its former Directors of fraudulent transactions and siphoning off as much as Rs 100 crore ( £12 million_ of funds from the company - you can see the details HERE

Everonn Education filed the case against Nikhil Gandhi, a former director of the company and the owner of SKIL Infrastructure, and P. Kishore, former managing director and family members of Gandhi. Kishore, the former MD, was subsequently arrested by the Central Bureau of Investigation for attempting to bribe income tax officials.

The Varkey Group alleges, Nikhil Gandhi and Kishore transferred Rs 38.72 crore from Everonn to Eduskill Learning and Rhett Infrastructure, both owned by close relatives of Gandhi. The transaction was shown as a share purchase agreement, which Varkey says was a sham.

In the second complaint, Varkey alleges that Kishore and Gandhi transferred Rs 75 crore from Everonn to a company Shree Bhakti Realtors, in which both of them were co-promoters.

"The criminal intent of P Kishore and Nikhil Gandhi is evident from the fact that they neither sought the requisite approvals nor informed the board of directors of the complainant company (Everonn) of the payment of such huge amounts to companies in which Gandhi and his relatives were interested. The fact that the relatives of Gandhi controlled Eduskill and Rhett was also illegally and unlawfully suppressed with a view to perpetuate a fraud," the complaint said.

The fact that billionaire Sunny considers the alleged fraud of 100 crore/£12 million, as a huge sum of money is very interesting. Sadly Everonn has now gone tits up but the legal cases continue. Surely this is of concern to Cenkos?

Of course this is not Gandhi's first bruch with the law. As you can see here, he settled a market abuse case with the Indian regulator SEBI out of court.

So where does that leave Mercantile? Between June 2015 and June 2016, according to official statements Mercantile's Directors claim to have burnt through £58 million of shareholders cash ( debnt and equity), for which shareholders got reclamation material laid on 60-75 acres of mostly foreshore and the intertidal zone at Karanja Creek and, some 56 small piles laid.

When a respected Danish Port has a recently prepared budget cost of 26 million Euro's to build a deep water container terminal with 500 metres of quay frontage dredged to 15 metres, by reclaiming 82.5 acres of land within the harbour - perhaps MPL's shareholders should ask the principle engineers of the proposed Danish port development project to cast their eye over Karanja for them - because most of the cash burn to date at Karanja simply makes no sense whatsoever.

Likewise the recent additional £36 million fund raise ( nice work Cenkos, commission c £2 million) principally for additional surcharge material - to put this astonishing sum in some perspective consider the budgeted cost to build the 82.5 acre container terminal at the Danish Port.

It is simply astonishing that the Institutional Investors appear to have stumped up the bulk of the additional £36 million of funds without carrying out even the most basic due diligence - that is in checking ut Gandhi's CV and the actual costs of building a real port.

Meanwhile, here's a list of some choice quotes over the years.

Oct 2010: AIM Admission Document - when the company was known as Skil Ports & Logistics (SKIL).
The Directors expect the Facility to be generating revenues within 24 months of Admission. Construction of the Facility, which the Directors expect to commence during the last quarter of 2010, is expected to be fully completed within 36 months of Admission;

May 2014: We continue to expect to have a revenue generating facility in operation by the end of 2015 with revenue from partial commencement of the logistics facilities expected to be produced by the end of 2014.

Sept 2014: Based on the progress to date, as outlined above, I remain confident that SPL will deliver a fully developed and operational facility by the end of 2015.

Dec 2014: With piling expected to progress at a rate of 4-6 piles per week, the Company expects construction of a sufficient part of the jetty to be completed by the end of October 2015, thereby enabling partial opening of the port by the end of the year.

Apr 2015: Progress has been made and the pace of works earlier this year gives me confidence that the management will deliver a part operating facility by the end of 2015.

May 2015: I remain confident that part of the facility will be operational by this year end and I am well aware that my personal reputation remains at stake until this is achieved.

July 2015: The recent delays are now behind us. I do not foresee any further delays to the timetable".

Sept 2015: The unforeseen recent delays have impacted on our previously anticipated timeline but we will be doing everything we can to make up as much time as possible in the coming months with an intention of starting operations during the first half of 2016".

March 2016: SPL recognises that construction projects of this magnitude inherently come with execution risks and the precise timing of specific milestones may change. The Company will update shareholders against these milestones as appropriate.

Sept 2016: As expected, we were able to continue ground improvement works during the monsoon season, albeit at a slower rate, but work will intensify after the monsoon, allowing us to drive toward our goal of ensuring that the facility is completed at the end of Q3 next year. Whilst it is expected that the facility will be capable of receiving vessels by the end of this year, management are not forecasting revenues from operations until later in 2017.

Oct 2016: Funding expected to complete construction of Multi-purpose Terminal and the Logistics Park (the "Facility") by end of Q3 2017

March 2017: The Company is confident of completing its facility by the end of this year.

Ends.

Anyone holding this stock needs to have their head examined as whatever assets it has will in due course be owned by the banks and the shares will be worthless. The red flags are everywhere. As to Cenkos, how on earth has it ignored the Gandhi issues? Surely it has (yet again) brought AIM into disrepute?


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