Mettis Global News
Mettis Global News
Mettis Global News AD
Mettis Global News AD

JS Group calls allegations by Hum Network baseless and objectionable

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

August 18, 2020 (MLN): Jehangir Siddiqui and Co. Limited has called out Hum Network Limited (HUMNL) for making baseless, frivolous and highly objectionable allegations against the company and its various associate and subsidiary companies (JS Group), that too without providing any reliable or admissible evidence to substantiate those allegations.

For the uninitiated, HUMNL around last week had explained the reasons behind the undue movement in its share price, wherein it increased from Rs. 2.31 per share to Rs. 17.05 per share during the period starting from April 03, 2020, to June 18, 2020.

One of the reasons given by HUMNL included the sale of the company’s significant shareholding by Aitkenstuart (Private) Limited (APPL) to JS Bank Limited (79,030,303 shares) and Jehangir Siddiqui and Co. (3,375,197 shares).

In a notice issued to the Pakistan Stock Exchange, JS Company stated that it was compelled to clarify its position considering the gravity and severity of the allegations, which have caused huge reputational damage to JS Group.

The allegation that JS Group and Kingsway Capital (which is completely separate and independent of JS Group) are acting in concert at the forthcoming elections are denied as baseless and without any merit whatsoever, the notice said. It further added that APPL is a separate entity that is completely unrelated to JS Group.

It is a commonly known fact that banks, investment companies, and corporates regularly purchase and sell shares of listed companies over the PSX platform. Such normal commercial transactions are governed under the relevant securities laws and are a matter of public information. Therefore, there is no violation of any law is JS Group company may have taken a position in the shares of the company, especially since such transactions are reported to the PSX, the notice added.

‘We note that the shareholders' list of Hum available to us as of June 30, 2020, does not have APPL on the share register, so we do not understand the relevance of including their name’, the company said.

The company went on to stated that Mr. Munaf Ibrahim is not associated with JS Group in any capacity since leaving JSCL 8 years ago. It further iterated that Kingsway Capital is an independent entity and Mr. Munaf Ibrahim is an individual, both of which are completely unrelated to JS Group.

Moreover, it stated that HUMNL has itself acknowledged in its letter that JS Group holds only 9.94% shares in it, which makes it clear that the former has tried to club the shareholding of Kingsway Capital and Mr. Munaf Ibrahim with JS Group’s shareholding with mala fide intent to deliberately mislead the public and the regulators as well as cast a negative image on JS Group.

‘It is further submitted that Kingsway Capital and other foreign shareholders have in the past supported the Company’s management in their activities. This is clearly evident from the 7th Extraordinary General Meeting held in February 2017, and 14th Annual General Meeting held in October 2018, where proxies in favor of the management were given by Kingsway Capital.’

‘JS Group is not aware of and is not concerned with any differences which may have arisen between the management of the company and Kingsway Capital. However, it is an absolute slur to blame JS Group for any shortcomings that the management of the company may have had in maintaining cordial relations with its institutional investors’, the company said.

The aggregate shareholding of JS Group entities comes to 94,027,500 shares which come to less than 10% of the total issued and paid-up capital of the company. Therefore, there is no and there was never any obligation on JS Group to disclose its shareholding. Making statements that JS Group is non-compliant of statutory laws is patently false and simply shows the lack of understanding of the laws on the part of the company, the company further added.

‘It has been accepted by the company itself in the letter that APPL is owned by OBS Health Care (Pvt) Limited, which is not related to or connected with JS Group. Relevantly, JS Bank provides banking services to hundreds of thousands of customers. The alleged purchase and sale of shares by any customer of JS Bank cannot under any circumstances be linked or connected to JS Group’, the notice said.

‘The performance of HUMNL has been deteriorating for the last couple of years. The company incurred a loss after tax of Rs. 535.883 million in 2019. It further incurred a loss after tax of Rs. 327.263 million in the nine months period ended March 31, 2020. Additionally, rising debt levels and the increase in the number of related party transactions also appear to be highly examinable from a regulatory perspective. The management is perhaps aware of its own shortcomings and therefore fears that the shareholders may not be satisfied with the performance and would want to bring changes in the Board of Directors.

‘In the past many years, the management had been successful in procuring proxies from shareholders including foreign shareholders. However, for the forthcoming elections of directors to be held on August 22, 2020, the management may be finding it difficult to convince foreign shareholders to provide their proxies in favor of the retiring directors due to the extremely poor performance of the company and huge losses. The letter issued by HMNL is, therefore, a mala fide attempt to derail the election process by creating an unsubstantiated controversy.

‘Moreover, there should be an inquiry into the shareholding and trading activity of the management of the company. It might be a possibility that the management itself has manipulated the share price of the company and is now simply trying to lay the blame on JS Group to camouflage their own acts. It is strongly suggested that the Honorable SECP and PSX may conduct an inquiry into the affairs of the Company and also conduct an inquiry of the shareholding and trading activity of the sponsors, directors, and management of the company to ensure no act of market abuse has been committed by HUMNL and/or its management. If found guilty, strict civil and criminal action should be taken against the management of the company’ the notice stated.

JS Group finally concluded by saying that it is discussing the matter internally as well as with its legal counsel to determine the next steps against HUM, its management, and company secretary for making false allegations, all with a clear aim and intent to malign the reputation of JS Group.

Copyright Mettis Link News


Posted on: 2020-08-18T12:09:00+05:00