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AIM-China Filthy Forty Origo warns on NAV – ouzo time as shareholders brace for another spanking

By Nigel Somerville, the Deputy Sheriff of AIM | Friday 20 April 2018

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.

ShareProphets AIM-China Filthy Forty investment company Origo Partners (OPP) has updated the market this morning in a series of announcements which look to amount to a complete dog’s breakfast as far as shareholders are concerned. There is a new Nomad which looks to me to have been appointed in suspicious circumstances, there are proposals to change the remuneration of the company’s grotesquely overpaid advisors….and expected realisation amounts will be significantly less than the Company's last reported net asset value. What’s not to like!

The grotesque fees of adviser Origo Advisers Limited (OAL) have been well covered here on ShareProphets previously (see HERE) and are well worth a read (if you have a sick-bucket handy). But now the company proposes to hand over 8% of all cash returned to shareholders. I presume that includes the proceeds of realisations last year which last heard , luckily for OAL, were still in China. Given that the remuneration was, up until now, a fixed fee that sounds like someone is having his cake and eating everyone elses.

Oh, and Origo will continue to fund OAL's operating costs incurred in connection with Origo including a modest office share arrangement in Beijing and limited personnel costs. Nice! Are they the same offices as per THIS?

A new Nomad was announced this morning. When lined up against the proposed effective date for OAL’s new package of 1 January 2018 – which still has to be voted through – that looks a bit suspicious, does it not? Did previous Nomad, Smith & Williamson, have a problem with some of this morning’s proposals? I think we should be told.

Having repeatedly warned that this company has enough Red Flags to warrant a dash for the exit, we are now told that:

The Company's Board of Directors has undertaken a comprehensive review of the Company's portfolio and has made several trips to Beijing to analyze the portfolio and meet with Company's investment advisor and investee companies.  The Board is currently of the view that expected realisation amounts will be significantly less than the Company's last reported net asset value.  The Board expects to update shareholders in the Company's 2017 Annual Report, which should be released before the end of June in accordance with the AIM rules.

Er…right: so the last reported NAV is way off the mark, but we are not told by how much: shareholders will have to wait until the end of June for that. The question is whether the asset realisations will generate anything at all for shareholders after holders of the Zeros (whose money appears not to be contributing to OAL’s new fees) have been paid off.

The last quoted NAV was already just 9 US cents per share on a NAV of $32 million, but total assets came in at $90 million. I think anyone can see how realisations significantly less than the Company’s last reported net asset value might affect shareholders after the zeros (who get paid first) have been paid off.

You have been warned and warned again. The writing is on the wall – SELL!

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