By Tom Winnifrith | Friday 23 June 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.
When AIM listed Mercantile Ports & Logistics (MPL) disappears up in smoke having sent tens of millions of UK Investor cash to money heaven, the stink will force Nomad Cenkos to show that it acted in a way that did not bring the Casino into disrepute, as it did when it allowed Quindell to commit wholesale fraud. Thus one shareholder, a veteran of the ports and logistics industry, is putting Cenkos on record now so that it can have no excuse at the death. letter one HERE raised clear questions of fraud. Now the shareholder has followed up with a second letter to the head of corporate governance at Lagos Securities, Amber Wood, cc'ing in Redleaf, the PR to Mercantile as well as Quindell at the height of that fraud.
Dear Ms Wood,
Mercantile Port & Logistics RNS Statements - hopeless optimism or wilful deception? It can't be both - you be the judge!
Here is a little taster from the rich smorgasbord of material provided by the Management/Nomad/Comms Agency during the last few years:
RNS - December 2014 - Karanja project update
'Following the ceremony on 1 December, 2014 attended by the Honourable Chief Minister of Maharashtra, Nikhil Gandhi reiterated the Company's targeted opening of the port at Karanja by the end of 2015.'
Reality? In June 2017, the Executive Chairman shamelessly informs the Market about the possibility of limited operations commencing as early as 2018 with 2 small jetty berths.
'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.'
Reality: at the end of 2015 berth piling had not even begun! - and in any event as any industry professional would tell you, would take without interruption, at least 2 years to complete to enable the port to become operational.
RNS - April 2015 - Project Update
"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.' N.Gandhi
Reality: Gandhi knew very well this was total nonsense and brazen misrepresentation, since berth piling was yet to get underway and in fact did not even start until 9 months later in early 2016.
'In addition, the Company expects to host a computer generated video of the project on its website (www.skilpl.com) in early January 2015 which should enable shareholders to visualise the project better.'
Reality: what shareholders are now going to see for a final build cost of £150 million, is according to the Prelims, nothing remotely similar to that computer generated video of a 1,000m fixed quay and 200 acres of terminal hardstanding and warehousing, which still today is on the front page of MPL's website, but a much reduced considerably less valuable specification, which we estimate could be built for probably less than £50 million.
'A port and logistics facility at Karanja has been a vision of mine for a number of years and I am staking my reputation of 25 years on ensuring that we have an operational port, that is fully funded, by the end of 2015' N Gandhi
Reality: berth piling was still yet to commence by the end of 2015. Yet, the Executive Chairman is telling the Market to expect a working port by the end of 2015, when the reality is that by the time that date is reached, he knows very well the Company will have not even commenced building the berths, which will ordinarily take at least two years to complete.
RNS after RNS, that does not bear even a passing resemblance to reality. I could go on and on with many further examples, perhaps topped by one of the AIM markets greatest ever Fiction Publications, the MPL Shareholders Circular to raise another £37 million, which the passage of time has shown to be a fiction masterpiece.
If the Nomad had carried out its responsibilities and undertaken some basic on-site due diligence to check the proposed contents of the Shareholders Circular for accuracy. They could have asked Management why when the Company was already paying circa £4 million a year interest payments on bank debt raised to part fund the project, the principal contractor had carried out NO land reclamation in the 4.5 months before the proposed publication date of the Circular and, would not begin again for a further 2 months afterwards. Thereby revealing all the highly optimistic construction progress targets in the document and the claim that work had progressed with interruption since October 2015, to be nothing more than a total fabrication.
The Circular contained an end of Jan 2017 Land reclamation progress target of an additional 65 acres - actual result was ZERO acres - industry tip to Management/Nomad/Comms Agency - contrary to the shareholders circular, to reclaim port land it is actually necessary to have marine civil engineering contractors on site carrying out the work!
This one simple check, could have potentially saved investors from almost certainly seeing another £37 million of their funds disappear like morning mist into the Indian sub continent ether.
Incredibly, post the cash raise and shocking news that MPL had in fact carried out ZERO land reclamation between June 2016 and Jan 2017, MPL management then rubs salt into investors open wounds by shamelessly announcing an ongoing project cash burn up in the stratosphere - multiples more than could reasonably be expected, including a staggering circa £21 million spend during Q4/2016 when there was no onsite land reclamation or berth piling going on whatsoever - and during a 12 months period June 2016 - June 2017 in which MPL delivered less than 10% of that the Market were told to expect in the Shareholders Circular to raise another £37 million.
Do you think shareholders that have seen the loss of 97% of their investment since IPO, and 50% since the £37m recent cash raise, might have a case against the Nomad and Comms Agency for aiding and abetting what looks to many industry professionals as a clear example of fraud by misrepresentation - particularly since it involves an MPL Executive Chairman currently making the news in India on multipole fronts for all the wrong reasons, as the subject of insider dealing charges brought by the market regulator, along with Indian High Court criminal proceedings for issuing a signed blank cheque to a major port contractor, and the recipient of writs for allegedly siphoning off tens of £millions out of a quoted company he had previous executive responsibility for.
Best wishes, etc.
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