Dear Editor,

Referring to below report:

https://theedgemalaysia.com/node/687599

Bursa moved the goal posts for AirAsia X with new requirements, sources say

By Kang Siew Li / theedgemalaysia.com 25 Oct 2023, 04:04 pm

"Under Bursa Malaysia’s guidelines, a company can apply to exit [the] PN17 status, following two consecutive quarters of net profit after completion of its financial regularisation scheme. However, AAX is now required to show four consecutive quarters of net profit due to concerns about the sustainability of its business,” an analyst pointed out.

 

I would like to point out the above headline is totally wrong on fact and uncalled for:

https://asklisting.bursamalaysia.com:8443/MainLR/Pages/MainPracticeNote17.aspx

 

If the author is referring to below Bursa guidelines then the fact is AAX never submitted any PN17 regularisation plan to start with.

5.2 (C) Record a net profit in 2 consecutive quarterly results immediately after the completion of the implementation of the plan. In this regard, the PN17 Issuer must ensure that the relevant quarterly results are subjected to a limited review by an external auditor before they are announced to the Exchange.

 

And if the author is referring to AAX debts restructure, capital reduction and 10 to 1 share consolidation then did AAX carry out all the below EGM resolutions approved by shareholders?

SPECIAL RESOLUTION

PROPOSED REDUCTION OF 99.9% OF THE ISSUED SHARE CAPITAL OF AAX PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 (“ACT”) (“PROPOSED SHARE CAPITAL REDUCTION”)

 

ORDINARY RESOLUTION 1

PROPOSED CONSOLIDATION OF EVERY 10 EXISTING ORDINARY SHARES IN AAX (“AAX SHARES”) INTO 1 AAX SHARE (“PROPOSED SHARE CONSOLIDATION”)

 

ORDINARY RESOLUTION 2

PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW AAX SHARES (“RIGHTS SHARES”) TO RAISE GROSS PROCEEDS OF UP TO RM300.0 MILLION (“PROPOSED RIGHTS ISSUE”)

 

ORDINARY RESOLUTION 3

PROPOSED ISSUANCE AND ALLOTMENT OF NEW AAX SHARES TO RAISE GROSS PROCEEDS OF UP TO RM200.0 MILLION BY WAY OF SUBSCRIPTION BY PLACEES (AS DEFINED HEREIN) (“PROPOSED SHARE SUBSCRIPTION”)

 

On AAX made a write-back in provision of RM600 million for travel vouchers to passengers and travel agents:

Did the author know the previous report by theedgemalaysia below and had theedgemalaysia check with AAX did AAX reimburse the affected travel consumers accordingly or is AAX made a write-back in provision of RM600 million for travel vouchers to passengers and travel agents as per debts restructure treating its customers as creditors and repay them only 0.5 sen for every ringgit paid?

 

Mavcom to act on AirAsia X if ticket purchases not reimbursed accordingly, says customers should not be classified as creditors

https://www.theedgemarkets.com/article/mavcom-act-aax-if-ticket-purchases-not-reimbursed-accordingly-says-customers-should-not-be

KUALA LUMPUR (Nov 12): The Malaysian Aviation Commission (Mavcom) has urged AirAsia X Bhd to reimburse the tickets for customers whose flights were cancelled, in response to the airline’s action of treating its customers as creditors and repay them only 0.5 sen for every ringgit paid.

 

The Nov 12 statement came soon after all three groups of AAX creditors passed AAX’s restructuring plan, which will see AAX pay just 0.5% of some RM33.65 billion in liabilities, as well as terminate all of the airline’s existing contracts.

 

AAX’s liabilities categorised as tickets sold to passengers and travel agents amounted to just under RM600 million, according to details of the airline’s restructuring proposal. AAX’s proposal would see only under RM3 million paid back from the initial amount.

 

In a statement, Mavcom said it will not hesitate to exercise its powers under the Malaysian Aviation Commission Act 2015 (Act 711), if AAX fails to reimburse the affected travel consumers accordingly

 

Note: https://www.malaysianow.com/news/2023/06/10/3-year-fight-for-airasia-x-refund-ends-in-disappointment

3-year fight for AirAsia X refund ends in disappointment

Aiman Md Uslim expresses frustration with the budget airline's restructuring process which he says did not take passengers into account: Azzman Abdul Jamal June 10, 2023 8:00 AM

 

May I know what is the author trying to imply with the below sentence and should Bursa SC bend the rule and regulation just for AAX?

“The issue is AAX doesn’t have a regularization plan because it is making money. It is not going to submit a plan because there is no other plan other than to run its airline business,” said a source.

 

On “Critics also questioned the flight of high profile companies such as Grab Holdings Ltd to the US ……For instance, why would companies like Grab Holdings Ltd go public in the US?” a source asked, adding that Bursa Malaysia’s strict rules and regulations for listing applicants, some of them quite arbitrary or unexpected, are driving companies to other markets”

May I say the author is totally wrong on Grab Holding Ltd

 

Allow me to point out Grab went public in Dec 2021 by merging with a special-purpose acquisition company, or SPAC. The deal in which Grab raised USD 4.5 billion and was valued at nearly USD 40 billion.

As at 27 Oct 2023 Grab is quoted at USD 3.03 for a market capital of USD 11.83 billion, a loss of USD 28.17 billion. Imagine if Grab was listed in Bursa how many Big Funds, EPF and retail investors are going to lose their pants?

 

On “According to sources, the proposed disposal of Capital A’s aviation assets to AAX will proceed, despite recent events”

Is the author implied Bursa and SC should bend the rule and regulation for the above deal?

Please allow me to point out:

As at 30/6/2023 Capital A

Current assets: RM 2,269,900,000

Current liabilities: RM 14,208,631,000

Net current liabilities: RM (11,938,731,000)

Shareholders’ equity RM (8,390,820,000)

Non-controlling interest: RM (1,813,867,000)

Total equity: RM (10,204,687,000)

Capital A’s aviation is lose making

Revenue/ASK: Q2 USD 4.22 cents cumulative 6 months USD 4.28 cents
Cost/ASK: Q2 USD 5.01 cents cumulative 6 months USD 4.72 cents

Cost/ASK ex fuel: Q2 USD 3.32 cents cumulative 6 months USD 2.95 cents

 

If AAX acquires CapitalA aviation assets and liabilities, immediately AAX is going to default on its obligation on multi-billions of net current liabilities because AAX will not have the capacity or capability to raise USD billions in debts and equity.

 

https://www.channelnewsasia.com/business/airasia-parent-plans-raise-more-1-billion-debt-equity-ft-3871336

25 Oct 2023 02:28 PM: Capital A Berhad, the parent of AirAsia, is planning to raise more than $1 billion in debt and equity, and will list some of its businesses through a blank-cheque company, the Financial Times reported on Wednesday.

https://www.thestar.com.my/business/business-news/2023/10/13/airasia-seeks-us400mil-loan

Friday, 13 Oct 2023: KUALA LUMPUR: Budget carrier AirAsia, a part of the Capital A Bhd group, is seeking a US$400mil loan, half of it from private credit funds, to refinance debt, according to people familiar with the matter.

 

Without prejudice may I say AAX and CapitalA have no intention to submit the PN17 regularization plan and are provoking Bursa to suspend and delist AAX and CapitalA so that AAX and CapitalA BOD can blame Bursa for their self-inflicted predicament?

https://www.azmilaw.com/insights/directors-liabilities-for-insolvent-trading-under-the-companies-act-2016/

A gentle reminder: Director’s Liabilities for Insolvent Trading under the Companies Act 2016

 

I have fond memory and highest respect for theedgemalaysia investigative reporters in exposing corruption at the highest level and wrong doing on Corporate Malaysia. I wrote below in support of theedgemalaysia. So please do a proper research before publication or you will be mistaken for trying to be a mouthpiece for AAX or CapitalA.

https://klse1.i3investor.com/blogs/Sslee_blog/2023-01-03-story-h-302011975-Fairness_Justice_and_The_Truth.jsp

Wednesday, 28 Dec 2022 SINGAPORE: John Soh Chee Wen, the mastermind of Singapore’s biggest case of stock market manipulation that wiped out nearly $8 billion in market value in October 2013, on Wednesday was sentenced to 36 years in jail, while his co-conspirator Quah Su-Ling was handed 20 years.

 

The court case spanned a record 349 successful charges in some 200 days of trial over nearly four years.
Prosecutors had sought a jail sentence of 40 years for Soh, and 19½ years’ for his co-conspirator Quah.

 

The pair were found to have manipulated the share prices of Blumont Group, Asiasons Capital and LionGold Corp – known collectively as BAL – between August 2012 and October 2013, through 187 trading accounts held with 20 financial institutions in the names of 58 individuals and companies.

 

https://www.theedgemarkets.com/node/649866

I can’t help but agree with The Edge Headline: Singapore gets it right- Severe punishment is the best deterrent against future commercial crimes.

Finally justice is being served and the ghosts of yesteryear Omega Securities scandal can now Rest in Peace.

 

Back to Malaysia we make international headlines: https://www.dailyexpress.com.my/news/203144/edge-editor-freed-of-criminal-defamation-charges-over-articles/

 

KUALA LUMPUR: Azam Aris, the editor emeritus of local business newspaper The Edge, was Tuesday acquitted and discharged of one criminal defamation charge after being sued for defamation over two articles on penny stock manipulation published in 2020 and 2021.

 

However, Azam was given a discharge not amounting to an acquittal (DNAA) for the second charge, The Edge reported.

Azam was charged in September with two counts of criminal defamation at the Magistrate’s Court against a Malaysian businessman and four firms over two articles titled “Hidden Hands Behind Penny Stocks Surge Under Scrutiny” (April 12, 2021) and “Hidden Hands Behind Penny Stock Surge” (September 21, 2020) that exposed stock manipulation on Bursa Malaysia

 

Luckily for Malaysians, common sense prevails otherwise we will be a laughing stock of international investing communities as a country that charged an investigating reporting editor/reporter for criminal defamation instead of bringing the market manipulators to book like what Singapore did.

 

I just wonder if the case happens in Malaysia, will Bursa/SC and AG have the capacity, determination and political will to go to the length and depth of Singapore SC and AG “investigating through 187 trading accounts held with 20 financial institutions in the names of 58 individuals and companies to secure a conviction of stock market manipulation”

 

I am guessing so far no investigation was carried out on market manipulators on the “Hidden Hands behind Penny Stocks Surge under Scrutiny” (April 12, 2021) and “Hidden Hands behind Penny Stock Surge” (September 21, 2020) that exposed stock manipulation on Bursa Malaysia

 

Thank you

Have a good day

 

Best Regards

Lee Soon Sheng

PS: I wrote the below on How to make Bursa Malaysia the choice of investor and capital market:

https://klse1.i3investor.com/blogs/Sslee_blog/2019-04-27-story204216-How_to_make_Bursa_Malaysia_the_choice_of_investor_and_capital_market.jsp

In stocks market investing, the caveat emptor concept of contract law was forced onto ordinary investors that places the onus on the ordinary investors to perform due diligence before making transactions knowing very well that ordinary investors are subjected to information asymmetry hazard. (Poor quality of disclosure provided by the listed company and poor due diligence by Investment banker)

 

This asymmetry creates an imbalance of power in transactions, which can sometimes causes the transactions to go awry, a kind of market failure in the worst case involve insider fraud, accounting fraud, insider trading, IPO/RI promoter/underwriter Investment bank failure in their due diligence, pump and dump and etc.

 

In Malaysia, Bursa Malaysia is mandated to operate the stock exchange as a commercially driven, public-listed entity. It is also mandated by Listing/Regulation/Disclosure Act as the front-line market regulator policing public-listed companies and market intermediaries. Perhaps these two mandates clash and give rise to conflict of interest as many of Bursa’s decisions on approval, suspension, delisting and waive seem indulging in excessive corporate abuse for the benefits of controlling shareholders.

 

On the other hand, SC is mandated under CAPITAL MARKETS AND SERVICES ACT 2007 to initiate investigation and prosecute offenders under the Act are normally will act only if investing public make a complaint with some initial evidence of offenses committed by the offenders.

 

In order to make Bursa Malaysia the choice of investor and capital market something needs to be done by Bursa and SC to ensure high level of trust and integrity among their public-listed companies and to be seen in going after those who break the rules with the full force of the law. Only then the confidence and the crowd will return. As investors, what we can do now while waiting for the confidence to return is to attend the AGM and demand good governance and transparency from the BOD.

 

I think Bursa and SC still owed me answers to below repeated questions on Xinguan:

Question 1: https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=2940952

Referring to the above Bursa announcement, please allow me to personally ask Datuk Muhamad Umar Swift did Dato’ Wu Qingquan (“Dato’ Wu”) and Wu Lianfa pay those fines imposed on them?

 

Question 2: If the answer is no, then May I ask did Bursa take any legal action to collect the fines?

 

Question 3: If Bursa did not take legal action to collect the fines from recalcitrant offenders then how did Datuk Muhamad Umar Swift as Bursa Malaysia CEO ensure Bursa to be an efficient, vibrant, fair and orderly market?

 

Question 4: Will Datuk Muhamad Umar Swift please check with SC on my Xingquan complaint:

Is SC taking any action on my previous questions below? Or is the case closed with no further action?

Question 1: In view of the seriousness of offends/frauds committed by the fraudsters and their total disregard/contempt shown against authorities of SC and BURSA with no respect for Malaysia Law. Has SC made an extradition request with the Chinese government to extradite CEO Dato’ Wu and his brother executive director Wu Lianfu to stand trial in Malaysia Court?

 

Question 2: Refer google search: https://www.google.com/search?client=firefox-b-d&q=gertop

Xingquan brand products (Gertop) are available for sale at many online shopping websites. This means Xingquan still has production lines and assets in China but the China owner and Management team just took us Malaysians as fools and showed utmost contempt to SC and BURSA authorities/Malaysia law.

Will SC now invoke CMSA 2007 section 358 (1) in the public interest, taking legal action against Xingquan to recover loss on behalf of victims who suffers loss or damage by reason of, or by relying on, the conduct of another person who has contravened any provision of Part VI or any regulations made under this Act, the amount of the loss or damage by instituting civil proceedings against the other person whether or not that other person has been charged with an offence in respect of the contravention or whether or not a contravention has been proved in a prosecution?

 

Question 3: Is SC investigating Xingquan External Auditor: SJ Grant Thornton, IPO: CIMB Investment Bank Berhad and PP & RI: RHB Investment Bank Berhad principal advisor, underwriter and placement agent for gross negligence and failure to perform their fiduciary duty?

 

Note: Referring below SC announcement

https://www.sc.com.my/resources/media/media-release/sc-reprimands-three-china-based-companies-and-says-retention-of-four-directors-prejudicial-to-public-interest

The SC reprimanded Xingquan, its Executive Chairman and CEO Dato’ Wu Qingquan, Executive Director Wu Lianfa, former Non-Independent Non-Executive Director Ng Sio Peng and former Senior Independent Non-Executive Director Zhou Liyi for: 

Why no actions were taken against Xingquan External Auditor: SJ Grant Thornton, IPO: CIMB Investment Bank Berhad and RI: RHB Investment Bank Berhad principal advisor, underwriter and placement agent for:

 

1.   Gross negligence and failure to perform their fiduciary duty; and

2.   Complicite in above fraud/crime in auditing, preparing and approving Xingquan Financial Account, IPO Prospectus and RI Prospectus