28th Jun 2019 12:47
(Alliance News) - Origo Partners PLC on Friday said its net asset value declined sharply in 2018 due to write-offs of six of its investments after what was described as a "catastrophic destruction of shareholder value".
Shares in Origo were down 14% at 0.15 pence in mid day trade. The stock traded at 0.55p a year ago and 7.88p five years ago.
Origio's net asset value on December 31 was USD6.3 million, less than half of USD14.2 million NAV the year before. This gave an NAV per share of USD0.018 per share versus USD0.039 per share a year before.
This drop in NAV was primarily caused by write-offs of Origo's investments in Celadon, Gobi Coal, Staur Aqua, Fram, Six Waves, and Unipower, totalling USD6.7 million. The company also incurred realised losses of approximately USD300,000 on the sale of its investments in Niutech and Kincora Copper.
Origo Partners has terminated its contract with investment advisor Origo Advisors Ltd and has retained lawyers in a bid to "analyse legal issues in connection with the dissipation of shareholder value".
Chair John Chapman, who joined the board in 2017 when the entire board was replaced, said: "Origo represents a catastrophic destruction of shareholder value. Of the approximately USD276 million that the company raised, only about USD6.3 million remains on the company balance sheet mostly in the form of cash and a few investments noted above. No real capital was ever returned to shareholders.
"The company never paid a dividend and besides peculiar share repurchases in 2012 and a few years later totalling a little more than USD700,000, never returned capital through a buy back. The remainder was dissipated in, as best as we can tell, shockingly bad investments, fees paid to OAL and others, fees paid to former board members, fees paid to the former Nomad, fees paid to lawyers, fees paid to previous auditors and so on."
Chapman said it is now possible to determine roughly where Origo's money went. At the start of 2011, it had USD33.4 million in the bank and raised another USD92.5 million that same year. In 2016, it borrowed USD2.5 million because it had "burned though most of its cash".
The chair explained that Origo has invested around USD70 million, the majority of which was then written off, and its expenditure was "about USD57 million". Of the USD57 million, USD16 million was used for employee pay and Origo Advisors.
Around USD11.5 million was used for professional payments, "presumably primarily lawyers", the company said, and then USD4.6 million was paid to directors and USD3.6 million went toward fees from the 2011 capital raise. Chapman said it has been difficult to account for the last USD19 million "because it is buried within accounting categories that are not self-explanatory".
Chapman said: "The Origo story is a dismal one with lots of blame to go around beginning with the board, who are ultimately responsible for what happens inside a public company, the manager/advisor for obvious reasons, the previous nomad and the previous auditors. In light of the facts set forth above, we will solicit the views of our shareholders on how they wish to proceed and provide further details in due course."
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