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By Tom Winnifrith, The Sheriff of AIM | Sunday 9 July 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 disgraced AIM casino posterboy Mercantile Ports & Logistics (MPL) moves from being a member of the minus 98% club in which it currently sits to being a member of the minus 100% club, I want it known that Nomad Cenkos has been fully aware of massive issues all along and has done nothing other than bank obscene fees. As such we have run a series of letters from a big shareholder to Amber Wood, head of Corporate Governance at Lagos Securities, HERE and HERE and HERE and HERE. Now for letter five which puts fragrant Amber and Lagos, Nomad to the Quindell (QPP) fraud as well, on notice for when the final wipeout occurs that they will be held accountable. This letter has also been cc'd to AIM Regulation - I know they are useless but surely even they must realise that Lagos Securities has "form."
Dear Ms Wood,
Further to my previous correspondence, that company statements clearly crafted to mislead investors are not a recent and one-off phenomenon at Mercantile and, have in fact gone on for years - by way of further example please consider the following:
Mercantile Ports and logistics - 2013 Preliminary Results
'We continue to expect to have a revenue generating facility in operation by the end of 2015 WITH REVENUE EXPECTED FROM PARTIAL COMMENCEMENT OF THE LOGISTICS FACILITIES EXPECTED TO BE PRODUCED BY THE END OF 2014.' Executive Chairman Nikhil Gandhi
Really? - revenue from the logistics facility by end of 2014! Whatever Nikhil Gandhi and the Nomad's representative were smoking when they respectively wrote and verified the accuracy of that statement, it must have been good gear! The passage of time has shown the Nomad's due diligence to be ‘impeccable' !
Of the 200 acres of land reclamation detailed in the 2010 Mercantile IPO document, some 8 years later in Jan 2018, Mercantile will by its own admission, still not have completed the reclamation of the first 100 acres of land allocated to the port terminal!
Let alone start the reclamation and development of the 100 acres of land allocated to the logistics park, which will take at least another two years, and for which MPL's white collar criminal(insider trading) Executive Chairman was fraudulently telling the market to expect revenue from this facility by the END OF 2014. HOW CAN ANYONE WITHOUT KNOWINGLY LYING, EXPECT REVENUE FROM THE PORT'S 'LOGISTICS FACILITY' BY THE END OF 2014, WHEN BY 2018, RECLAMATION OF THE LAND ON WHICH THE LOGISTICS FACILITY WILL BE BUILT IS YET TO BEGIN?(PORT INDUSTRY TIP TO THE MPL EXECUTIVE MANAGEMENT WHO HAVE NO SENIOR LEVEL EXPERIENCE RUNNING PORTS - TO EARN PORT AND LOGISTICS RELATED REVENUE YOU FIRST HAVE TO BUILD A REVENUE GENERATING FACILITY!)
Of course, some with compelling evidence claim that statement was NOTHING MORE THAN A CRUDELY CRAFTED RUSE to muddy the waters around the quietly exercised but highly suspicious circa £17m drawdown of the Bank Loan Facility in H2/2014(appearing only as a deeply buried LOAN INTEREST LIABILITY note in the 2014 Prelims), which appears to have been immediately spent in H2/2014 on lord knows what. As the Market has since established there was not any on-site land reclamation activity whatsoever in the first 11 months of 2014, contrary to RNS and Financial Statements repeatedly stating land reclamation was underway from early in 2014 and was progressing well in the 2014 Interims - a physical impossibility since a 40m wide fast flowing tidal creek prevented all access to the site for aggregate vehicles until late November 2014.
The early Mercantile shareholders will vividly recall 2014, as the year when shareholders were fed a pack of lies by the hugely arrogant and self serving CEO as to why NO photographs could be taken of the site to monitor and publicise progress of the 'port under construction' - everything from the totally false claim of nearby top secret military establishment prohibiting photography in the area etc was thrown at 'prying’ shareholders, who had the temerity to request on-site photographs of the 'progress' being reported by the Company and Nomad, that by year end some circa £44m of their cash had funded - SCANDALOUSLY, GOOGLE EARTH HISTORIC IMAGES AND PHOTOGRAPHS TAKEN OVER THE SITE FROM A LIGHT AIRCRAFT HIRED BY DISBELIEVING SHAREHOLDERS, SUBSEQUENTLY REVEALED THAT NO PROGRESS WHATSOEVER HAD IN FACT BEEN MADE - THE EXECUTIVE MANAGEMENT'S CLAIMS WERE EXPOSED AS NOTHING MORE THAN A CAREFULLY CRAFTED RUSE TO MISLEAD!
That the II's not only allowed this to continue but actually went on to support another £37m cash raise for what management NOW claim is a higher specification terminal - which when details of which were released to the market some 8 months later, turns out to be hugely inferior specification compared to the £37m cheaper original, and has, a massively higher operating cost, and a totally implausible revised total construction cost, multiples of the estimated cost for a similar facility in Europe, never mind India, where labour costs are some 80% lower and construction costs circa 60% lower. It simply beggars belief.
It would seem the Executive Chairman, a high school drop out, whose first job as a 16 year old without any formal educational qualifications, was to hawk Paan(chewed for its stimulant and psychoactive effects) on the streets of Mumbai has, aided and abetted by a clueless Nomad, which clearly failed to carry out its responsibilities, managed to outsmart so called 'sophisticated' British II's and, quietly destroy/lose some £110m of their clients investment funds without any of them or the Nomad, spotting the dozens of red flags that are flying around the entire perimeter of Mercantile’s Kajanja site - despite the II's investors marketing literature claiming 'risk assessment' and 'due diligence' underpins all their investment decisions, and the Nomads responsibilities to carry out appropriate due diligence to verify the accuracy of proposed Company Statements!
The lack of response from the Company and Nomad in connection with the breach of the Terms of the Port Operating Concession following the reckless decision to proceed with the emergency £37m cash raise by way of a Placing and Open Offer in October 2016, supported by a Shareholders Circular which has subsequently been shown to be both materially misleading and, in direct contravention of the Operating Concession, is astonishing.
Particularly since it has been repeatedly pointed out to Mercantile and its Nomad and, comes after previous ‘form’ in this connection, as Mercantile earlier breached the 2 year construction time period in the Operating Concession. Which Mercantile were instructed to immediately rectify by appropriately resourcing the on-site construction. Unfortunately, the construction progress since June 2016 clearly shows beyond all doubt Mercantile has done no such thing, despite burning through cash, huge multiples of the estimated cost of the 10% progress made in the period against management target. Thereby, again putting shareholders investments at risk of further action from the Maharashtra Maritime Board, the Operating Concession Authority. Which, as the IPO and Placing Documents make clear, risks revocation of the Operating Concession, since the resourcing of the port construction since June 2016, could be considered a failure to respond to a previous breach, leaving Mercantile’s behaviour at extreme risk of being construed to be a slap in the face to the MMB and its Chairman.
Sadly this is what can often happen when a LSE AIM quoted company is run by a poorly educated, former teenage street spiv turned ‘entrepreneur', who developed a new found taste for the London Capital Markets after he was charged for Insider Trading by the Indian Market Regulator, and had writs recently served on him and close family members for allegedly siphoning £12m out of another Indian quoted company he had executive responsibility for. And a hugely arrogant, equally self serving CEO, who seems to think that after presiding over the shocking destruction of shareholder value, which has seen the shareprice collapse from 250p to 3.5p, he doesn't, as he so eloquently put it to one shareholder, who had the temerity to suggest he should take some responsibility: "need to put up with this shit from shareholders - i earned £Millions in my last job!"
Is he really suggesting shareholders are lucky to have him and the Nomad working for the Company, and that losing 98% of their investment since IPO, and 70% since the recent placing, is an acceptable level of performance for which they should be grateful, considering Management have knowingly and repeatedly misled the Market by way of Company Financial Statements and Placing Documentation?
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