As predicted… Aussie solar energy company’s numbers didn’t stack up
ROUGHLY A YEAR AGO Finweek raised some serious concerns about Australianbased solar power punter SunEnergy, then attempting to peddle its unlisted shares to high net worth individuals in South Africa. Now it seems a judgment obtained by an Australian investment body confirms our suspicions about this much-vaunted alternative energy project.
SunEnergy first came to prominence in 2010 when Finweek and Fin24 raised a red flag over its fund-raising efforts – mainly because it couldn’t furnish prospective South African investors with sufficient material with which to take a considered investment decision. That included latest audited financial statements and a prospectus.
Initially, it seemed its fund-raising efforts of 2009 weren’t terribly successful in SA, although that didn’t preclude SunEnergy from making a second run at local investors last year. It was its second fund-raising effort – involving a private placement of 5m shares at 1000c/share between February and end-June 2010 – that raised our suspicions. Tagged to the private placement was a second offer – set for late 2010 – of 10m shares at 2000c (yup, double the price) that SunEnergy linked to an AltX listing.
At the time of writing, Finweek managed to establish that SunEnergy had made no official (or unofficial) approach to the JSE about an application to list on the AltX. However, what was more disconcerting was that the numbers with regard to the private placement didn’t stack up.
For example, we pointed out SunEnergy’s share placement (at 1000c/share) would give it a value of R250m, but that value would magically surge to R700m by the time of the envisaged AltX listing. And then there were some obvious thumb-suck forecasts: such as the R1,35bn valuation inferred by placing 10m shares at 3000c/ share in 2012 and a R2,6bn market value suggested by a so-called “JSE offer” of 20m shares at 4000c/share in 2013.
As we pointed out in our original report, such astounding growth claims – especially in the absence of audited financial statements and an official prospectus – prompted the old market adage: “If it sounds too good to be true, it probably is too good to be true.”
Hopefully, readers heeded our misgivings, because last month the Australian Securities and Investment Commission (Asic) obtained “declarations and final orders” in the Federal Court of Australia against SunEnergy and prime mover John Price. The court action relates to fundraising by the SunEnergy companies and Price.
An Asic summary argued SunEnergy and Price promised investors a quick return on their investments when one or more of the SunEnergy companies were listed on the Australian Securities Exchange (ASX) within a short timeframe. However, no SunEnergy company was ever listed on the ASX. Sounds awfully familiar, doesn’t it? The Asic also obtained declarations from the court that the conduct of the SunEnergy companies and Price was “misleading or deceptive, or likely to mislead or deceive...”
Importantly, the Asic managed to obtain orders freezing the bank accounts of SunEnergy Asia Pacific and Price, and also secured interim injunctions against SunEnergy and Price restraining them from making offers of financial products to Australian investors.
The orders also required, within 72 hours of being served, the repayment of monies SunEnergy and Price received from investors where no shares or other financial products were supplied or transferred to those investors.
It’s heartening to see a body like Asic taking swift decisive action against a scheme that looked dubious from the gitgo. If only SA’s Financial Services Board had the same “go and get ’em” mandate.