Gold or Silver
30 Aug 2015
Gunn Aims at McLean , Wang & Ang bbr391.blogspot.co.uk/Gunn Aims at McLean , Wang & Ang
Gold or Silver
23 Aug 2015
More M Shareholder newsletter20th August 2015Dear Shareholders,Following the interim statement on 30th June, 2015, both Jay Newman and I have either metor had discussions with a number of shareholders, loan-note holders and other stake-holders toupdate them on the current progress. Given that six weeks have elapsed since our last formalcommunication, we thought it would be appropriate to give an update to all parties, and toprovide significantly more detail about the background of this issue.As shareholders are aware, on 22nd April the Board voted to terminate Mr Wang Yan Ting’s(“Wang”
role as Legal Representative in China and to replace him with Mr Cai Jun, theManaging Partner of Guolan, a Beijing law firm.Legal RepresentativeFor the change in Legal Representative to be legally (as opposed to corporately) effective, thechange has to be registered with the relevant branch of the State Administration of Industryand Commerce (“SAIC”. As Mr Wang retained the business licences and chops, it was notpossible to register the Legal Representative change and therefore, legally in China, Mr Wangremains the legal representative and retains effective control of LVST and its assets.Actions takenGiven Mr Wang’s refusal to comply with a valid board resolution, it is essential that otherinfluences are brought to bear within China to achieve a satisfactory resolution. Your Boardconsidered all legal options at the outset. We informed the Police and the Public SecurityBureau, but with no discernible benefit, as they characterised the matter as a commercialdispute. We have been advised that if we were to pursue the matter through the local courts, itcould take between 18-24 months with no certainty of a satisfactory conclusion. Moreover, ouradvice is that there is an established precedent in China, that in similar situations where adispute occurs between foreign and local interests, the underlying business often becomesunstable with suppliers, customers and employees all taking action to protect their respectiveinterests. Accordingly, if a legal route is taken, there is a significant risk that, by the time acourt decision is issued, the assets would be significantly depleted in value and there is also alengthy appeal process. Therefore, in the current circumstances, your Board is no longeractively pursuing the legal route, but will keep it under review as the situation develops. Atpresent, your Board believes that the diplomatic route will prove more fertile and reliable inachieving a solution as an engaged Chinese Government will want to protect the local economyand will be able to exert pressure on Mr Wang to achieve an amicable solution. Accordingly, as I indicated before, we have been in contact with the British Embassy in Beijing.Our Ambassador has discussed the business environment in Shandong and made specificreference to Sorbic International plc (‘Sorbic’ with the Provincial Governor in a letter whichwas sent early August 2015. To complement this action, I wrote a detailed letter to theGovernor which has been hand delivered to him personally by a mutual friend. We are now incontact with the Governor’s office to progress matters.The above initiative has been taken in conjunction with various discussions between Mr Wang,Tim Clissold and Frank Li (Tim Clissold’s colleague) in Linyi, Shandong Province, both inperson and by phone in search of an agreed settlement. These discussions have given focus toMr Wang’s concerns and his reasons for refusing to give up the Linyi Van Science andTechnique Co., Ltd (“LVST” chops and licences.Background historyPrior to Sorbic’s involvement, Mr Wang consolidated his shareholding by buying out the otherlocal shareholders in LVST to achieve a 100% holding. It appears from what Mr Wang hastold us that several of the original Chinese shareholders were never paid in full by him for theirshares and, as a result, some mon
Gold or Silver
05 Jul 2015
Beware China Beware Investing in ChinaPosted by Douglas Lawson on 26/Jun/2015It's all Wong"Chop" is a word that I have had little use for until recently. Since entering my lexicon around 12 months ago I have been using it with increasing frequency. In China, "chop" refers to a physical device, containing a company's seal, that is used to transact official business. Each chop must be approved by the Public Security Bureau (a Government office that acts as the provincial police) and a company may have various chops for different purposes, for example opening bank accounts, authorising invoices and paying suppliers. In the UK the signature of a legal representative of a company is normally legally binding but not in China. In China, it is possession of the chops that matter. I was to find this out the hard way.I first heard of Sorbic International plc ("Sorbic" in May 2010 when John McLean, the Chairman, came into our office in Edinburgh. We knew John through an investment in China Food Company plc, a manufacturer of animal feeds, soya sauce and other condiments. Five years ago, the UK, like much of the western world, was in the depths of the biggest recession since the Great Depression of the 1930s and the prognosis was bleak. On the contrary, China was continuing its breakneck rate of growth and overtaking Japan as the world's second largest economy. Consumer spending was soaring and Sorbic offered us a means of exposing our funds to this trend. Sorbic's business is the manufacture of sorbates, namely sorbic acid and potassium sorbate which are used as food preservatives. Sorbic had listed on AIM in September 2008, raising £6 million through Finncap, the small cap London broker. Sorbic operated through a wholly-owned subsidiary called Linyi Van Science and Technique Company Limited ("LVST", based in Linyi, Shangdong Province.Increasing demand for sorbates led the company to look for a new factory site where new capacity could be installed. This search led to Ulanqab in Inner Mongolia, over 1,000 miles from Linyi, where LVST would have better access to export markets and could take advantage of cheap land and financial incentives to build a factory that would double the existing capacity and feed burgeoning global demand. This new factory would be funded by the combination of a loan from Mr Wang Yan Ting ("Wang", pronounced 'Wong'), the CEO of Sorbic and founder of LVST, and a £3.5m placing of convertible loan notes (the "Loan Note(s)". The Loan Notes would pay a coupon of 10% and would convert (at the option of the Loan Note holder) at 32p, a modest premium to the share price at the time. As an investor, this opportunity ticked lots of boxes. Here was a chance to access the fast growing, Far Eastern consumer economy in a protected instrument that was secured on hard assets and paid a generous coupon. What's more, if Sorbic delivered on its plans, we could convert into equity and benefit from capital upside. If not, we would be repaid at maturity by a company with solid fundamentals - in 2010, Sorbic reported EBITDA in excess of £1 million after sales growth of 10%. With the only constraint on growth (apparently) capital, profits and operating cashflows looked set for very strong progess and the covenant looked strong. We completed our Loan Note investment on 25 August 2010. What wasn't to like?Quite a lot, as it turns out. But not initially. Initially, everything was very encouraging. In February 2011, Sorbic announced to the market that the new factory building in Inner Mongolia was "largely complete and construction remains on track in terms of timeline". Then, in September 2011, Sorbic announced the completion of construction work and expected commissioning of production in November 2011. The market could barely contain its excitement and the shares, which had steadily declined since the convertible issue in May 2010, soared from 10p to 22p. However, the first signs that all was not well came in December 2011 when Sorb
Gold or Silver
19 Jun 2015
Come On Mr J McLean The London Stock Exchange denies that there is a problem with China AIM frauds. What planet is patrician twit Chris Gibson Smith on? Well it is only dirty little people (aka private investors) who are being cleaned out so who gives a FF anyway, Chris old boy? This brings us to Sorbic (SORB) which today admitted that its CEO has stolen all its money, In fact I reckon it’s worse than that.You will remember that Sorbic PLC has debts of £3.75 million but claimed to have c£7.7 million in cash sitting in China. So dirty little private investors thought the stock was trading at a discount to net cash and bought the shares, no doubt from willing Chinese sellers.But it proved hard to get hold of that cash to pay the PLC bills, interest, repay debt etc. so eventually the UK Neds fired the CEO and said that they had brought in a Chinese law firm to sort it all out. And so today it finally fessed up:Further to the announcement of 22 April 2015, Mr Wang Yan Ting ("Mr. Wang", the Company's CEO has been removed from office, both at the Board (plc) level and in respect of the operating subsidiary ("LVST" in China. Furthermore, Mr. Wang's role as Legal Representative in China has been terminated and he has been replaced by Mr. Cai Lun, the managing partner of Guolan, a Beijing law firm. Since being replaced as the Company's Legal Representative for LVST in China and from the LVST board, Mr. Wang has declined to hand-over the Company's corporate seals (chops) and business licences, which he removed from the premises before he was dismissed. The local police were contacted, but deemed Mr. Wang's non-cooperation as a commercial matter and were therefore unwilling to assist.As a result of Mr. Wang's non-cooperation, the bank accounts and the day-to-day operations of the Company still remain under the control of Mr. Wang. Furthermore, Mr. Wang has confirmed that he has transferred funds belonging to the Company which remain under his control and, to date, he has refused to return them. At 31 March 2015, management accounts showed total cash balances of approximately RMB 72 million (£7.7 million). Sorbic International plc is wholly reliant on the transfer of funds from China to meet its operating costs and to repay the loan notes of approximately £3.75 million which, as detailed in the Company's preliminary results released in January 2015, remain outstanding and are therefore in default. As a result of the above, the financialposition of Sorbic International plc is uncertain. The Board has been informed that the Company's factory in Linyi continues to be fully operational and Mr. Wang remains in regular contact with the Company. The Group's new LVST board is working closely with the Group's legal team in Beijing and the UK non-executive Directors, who have actively been on the ground in China in recent months addressing this issue and they will continue to return to China whenever they are needed. Ends. In short Mr Wang Yang Ting claims to have stolen the cash and thus Sorbic is insolvent.But it could be much worse. I suggest that Mr Ting actually stole the cash ages ago or borrowed against it using it is collateral and just hoodwinked the dim NEDS that it was there at every audit. There never was any cash because this is a fraud. For Sorbic read Naibu where the CEO is in prison although the dim NEDs are in denial because someone claiming to be CEO Houyan Lin has put in a few phone calls and sent a couple of emails. It too has no cash.Meanwhile a raft of other AIM China stocks claim to be sitting on vast cash piles but can’t seem to afford cash dividends. JQW, Jiasen, Camkids, China Chaintek. Does Chris Gibson Smith start to see any pattern emerging yet?
Orchard Gate
29 May 2015
Gunn to complain Interesting letter in the FT today from John Gunn (ex CEO of B&C amongst other claims to fame). I'm not sure I completely buy it - if an geezer like me can see (as I did) that all these China AiM listings were likely to be frauds shouldn't a big multi millionaire businessman like him not have been able to do so but anyway here's what he says Sir, As a meaningful shareholder and (smaller) loan-note holder in Sorbic, I read Patti Waldmeir’s article (Notebook, May 27) with great interest. This is indeed a terrible state of affairs, whereby the system created to give reasonable protection to shareholders of Aim-listed companies has failed completely. The Aim arm of the London Stock Exchange has allowed so many flaky Chinese companies, where corporate governance is seemingly an unknown concept, to list in London. What information on Chinese executives holding corporate seals and licences, and therefore total control over the companies’ finances, was given by nominated advisers (nomads) and brokers? Precious little I think. Is the lack of action (by the London Stock Exchange) on these many scandals the result of brushing a problem under the carpet so as not to annoy the Chinese authorities or a fear of putting off further lucrative Chinese IPOs (with big fees for the LSE), or a combination of both? I have been pressing the company for some time to come clean on this affair. Now, with your assistance, it has. However, the biggest scandal is the complete lack of protection for shareholders under Aim rules at all stages in the life of such companies. Compensation from the LSE, nomads and brokers is surely due? John Gunn London W8, UK
Gold or Silver
07 May 2015
Restoration day Will be highly profitable , if we ever make it there .The new BOD seems to have shareholders interests at heart , which is a good sign .Looking forward with great optimism with this share.Onwards and upwards to 30p.Good luck all the beleagu
ConvictionTrade
24 Apr 2015
Wang tan Ting has been removed The CEO has been removed in a boardroom coup. It appears that he has been the major problem in transferring money to redeem the company's bonds which are in default. The new board have made all the right noises about repaying these bonds which should remove the overhang from the ordinary shares as bond holders cease to be a threat. Without Wang prospects improve for the successful resolution of the Inner Mongolian compensation claim and the company can look forward to re-establishing itself on a growth trajectory. The forthcoming AGM could be an interesting catalyst for the shares.
Gold or Silver
24 Feb 2015
£8 million cash Yet only 2p per share .Such a discrepency is quite rare and I am buying .Now staff are being added.Good luck all & sundry
