SEC warns investors about Energy Earth's coal mines
The Securities and Exchange Commission (SEC) has cautioned investors to take into account the valuation of two Indonesian coal mines reportedly owned by embattled Energy Earth before resuming investment in the company's shares.
Earlier, the SEC ordered Energy Earth to clarify the facts and the rights of the company's two Indonesian coal mines, as well as report a review of the two mines' fair value assessment.
Energy Earth acquired the two coal mines from an asset exchange of a group of companies worth about 24 billion baht, according to the SEC.
Fair value of the two coal mines is assessed at a combined 54.1 billion baht, according to Energy Earth.
Based on the SEC investigation, EY Corporate Advisory Services, the business rehabilitation planner for Energy Earth, reported that the company's rights to the coal mines held by Indonesian nominees were nullified according to Indonesian law.
The value of the two coal mines is appraised at around 1.5 billion baht, considering that the undeveloped areas have restricted transport access, according to the EY report.
The report also mentioned that Energy Earth acquired another Indonesian mine worth 3.69 billion baht in 2015, but the mine had zero fair value as there was no economic value when factors associated with investment value were taken into account.
The amount of coal estimated to be excavated in the concession period was included in Energy Earth's mining rights, while suspicion was also raised regarding the valuation of the two coal mines under an assumption that the mines could begin operation in 2019 and 2020, according to the EY report.
These actions by Energy Earth could constitute concealing important information or presenting misleading information, both of which are offences under the Securities and Exchange Act.
Energy Earth is among the 16 long-suspended listed securities allowed to trade temporarily on the Stock Exchange of Thailand from July 1 to 31. Purchase of these securities must be made only through cash balance accounts.
Krungthai Bank, Energy Earth's largest creditor, has launched a probe into the 12 billion baht granted to Energy Earth after the coal miner failed to redeem two lots of bills of exchange worth 90 million baht that were due in June 2017.