BP8 (ASX) Ann: Annual Report to shareholders

Originally posted by Protagonist ↑

My assumption (just a gut feeling) is the Company was intending to announce fluffy broad-brush stuff with few actual details or actual commitment to do anything.

ASIC is cracking down on these sort of announcements. They tend to trigger an immediate SP surge (as the Blue Aqua and CT announcements did). But sometimes don't result in anything. Shareholders buy-in on the expectation these deal will actually lead to something. And when they fizzle (and there's no announcement to confirm as much), they're left holding the bag

SCU was possibly on some ASX/ASIC watch list because of strange SP behaviour over the past several years. When they received a shareholder/s query about Blue Aqua, they probably decided to do a thorough investigation. Investors soften complain the regulator is a paper tiger. We should be grateful they are protecting our interests on this occasion.

Btw, I understand next week shareholder/s will submit a formal request to ASX to investigate SCU disclosures surrounding the Lantene acquisition. In particular, whether the Lantene buck-back provision was a material detail of the agreement, and should have been disclosed in the October 2020 announcement to market, rather than 11 months later in the financial papers.

SCU might soon have its hands full responding to these two sets of queries. If their disclosures are compliant (and I'm sure they are), they have absolutely nothing to worry about and it should be resolved very quickly.

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Hi @Protagonist,

Always interested in your point of view here, I find you as one who does a lot of research rather than blindly invest.

I have a different take on the Lantene terms. The way I read it - that claim/claw back entitlement is applicable only if they go down the route of listing/spinning off the seagrape project separately (as you'd assume such an IPO is assumed to increase the value of the project based on other spinoffs recently).

Condition #1) If the Group is able to list its seagrape project, it will raise funds of RMB15,000,000 to acquire remaining 49.9% equity of Lantene.

Condition #2) In the event that the Group does not acquire the remaining 49.9% within 3 years (implicitly from the spinoff date....as the acquisition of the 49.9% is conditional on listing of the spinoff, as per #1 above), the original owner of Lantene is entitled to claim back the 50.1% shares in Lantene.....

If condition #2 is not dependant on #1, I'd assume the wording to be:

If the Group is able to list its seagrape project or with in 3 years from the date of acquisition which ever is earlier, the group will raise funds of RMB15,000,000 to acquire remaining 49.9% equity of Lantene. Else, the original owner of Lantene is entitled to claim back the 50.1% shares in Lantene.....

I might be totally wrong here. One could also argue that there isn't enough clarity etc., but that's my take of things personally.

We have to remember that SCU got this acquisition for peanuts ($585k), so it makes sense that Lantene gets paid on a big event such as a spinoff. Even, assuming the worst case i.e. the 3 years period is from the date of the acquisition, keeping aside the disclosure issue, I personally have no dramas with that clause considering this operation is running on it's own in China without any massive capital outlay one-off or for operations...we got it for $585k and it's generating massive revenue and some profits...it has lots of synergies with SCU's Singapore based sea grape operations etc. Lots of rewards compared to the risks associated in my books.

Just to be clear, I am not convincing you or anyone here to not take this upto the ASX. It's totally upto you/others as shareholders. Everyone put their own hard earned money into this, so they have to act as per their rules and I respect that.

However, if I am the owner of a company (all shareholders are owners of the company), and if my employee (i.e. management) is not working as per my expectations and falling behind their work...I would not throw more work at to make a point about the shortfall, but rather motivate the employee to finish off current work and get back on the track. Else, the employee could simply throw the baby out of the bathwater and leave!! Sorry if the example sounds silly it's the weekend and we are in a long suspension, so why not!

ASX is not the only exchange in the world for these guys to list. They won't care about the reputation damage if they feel they had enough with the ASX bureaucracy and pack their bags and go to another exchange. Other exchanges won't care either as long as the documentation for new listing is done correctly. I think this is @Bruce72 's point...if this happens the only losers are us i.e. the shareholders. GMV is one such example (I wasn't invested in it, so I might not be completely correct here) where Dr. Yacov (similar personality to Mr. Gu in operations) had enough with ASX and a group of shareholders and left to NASDAQ.

Have you considered contacting management to provide you an explanation about the Lantene terms? Based on the response, or the lack of, then take it up with ASX? Again, each to their own, and everyone should act according to their own investment principles, this is not an advice.

All IMO, please DYOR folks and have a great weekend.