Switched off

As pre­dicted… Aussie so­lar en­ergy com­pany’s num­bers didn’t stack up

Finweek English Edition - - COMPANIES&MARKETS - MARC HASENFUSS marc.hasenfuss@finweek.co.za

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.

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