A strange letter involving Envair

by **hlk** Thu 08 Dec 2011, 20:01

On Tuesday, The Edge Financial Daily received an email from a person claiming to represent Carpet Raya Sdn Bhd director Deepak Jaikishan.

The email came with an attached document purported to be a statement by Deepak, but it did not have any letterhead, nor was it physically signed.

In the letter, a person claiming to be Deepak said he had a long-term view of his investment in ACE Market-listed Envair Holdings Bhd and that he is looking at increasing his stake to over 10% in the next few weeks.

To recap, Deepak emerged as a substantial shareholder in loss-making Envair on Dec 2 with a 5.06% stake. On the same day, former Envair director Datuk Teh Chee Teong had disposed of 15.8 million shares in off-market transactions. The value of Teh’s stake was not disclosed.

Given the uncertainty surrounding the document, The Edge Financial Daily decided not to run the story for a few reasons.

First, the attached document was a plain Word document with no formal letterhead and it did not have any physical signature. It also did not have any address nor official contact to verify its authenticity.

Second, the sender of the email gave only her first name and a handphone number. There was no surname of this person, no designation, no company address or details, except for a cheerful “Greetings from Tek Holdings” as a start to the message. It did not indicate what link Tek Holdings has with Deepak or the sender’s position in the company.

After all, the Envair shares were acquired by Deepak in his personal capacity, according to filings with Bursa Malaysia.

A search on the Internet showed little on Tek Holdings, which does not have a website.

To find that link, one has to do a search with the Companies Commission of Malaysia. Our search showed that Deepak is a major shareholder of Tek Holdings, together with his brothers, Dhanesh and Rajesh.

Tek Holdings was registered in February 2009, but there were no financial details available. The veracity of the letter could not be ascertained as there was no Tek Holdings letterhead.

Third, the email’s contents are interesting, containing potential market-moving statements.

The statement claimed that Deepak is looking to increase his Envair stake to over 10% in the coming weeks and that he intends to be part of the group’s management.

“We have by announcing our stake in Envair, decided to be part of this new business and over the next few months combine our strength to build the business further. We hope to be able to increase our stake in Envair over the weeks ahead to above 10% as we aim to be part of this thriving company’s executive board and management,” said the letter.

The letter also claimed that Deepak would not sell down his stake in the future but he will increase it steadily in the coming days.

Retail investors have been burnt as the market has recently seen numerous quick entry-and-exit strategies by substantial shareholders in companies such as Harvest Court Industries Bhd and Sanichi Technology Bhd. Share prices of these companies rose dramatically, fuelled mostly by speculation, only to fall back again.

Is the letter intended to quell investor fears of another quick enter-and-exit strategy? Or is it to whet investor appetite?

If one reads into the statement, it would suggest that the stock could rise in the coming days or weeks if there is a big buy order for another 5% block.

Interestingly, Envair’s shares did not behave that way yesterday. After opening 0.5 sen higher at 31 sen, the stock closed two sen lower at 28.5 sen with 4.29 million shares done.

Incidentally, another national daily decided to publish the contents of the letter yesterday, with a front page story in its business section.

The Edge Financial Daily receives dozens of press releases daily, from public-listed companies themselves or their public relations firms. This is certainly one of the strangest statements we have received.