Battle of the seas at Sea Star Cyprus

— NEL’s Ventouris claims insider trading, unfair competition

— Vardinoyiannis to become SEAS Chairman next Thursday

 

An ambitious attempt by Sea Star Capital Pcl (SEAS) to raise up to EUR 70 mln from Cypriot investors risks failure following allegations by an arch-rival accusing Sea Star majority shareholder Ioannis Vardinoyiannis of committing many irregularities that will hurt the interests of small investors.

Apostolos Ventouris of NEL S.A., a competitor Greek shipping group, told a press conference in Nicosia yesterday that Cypriot investors risk being “ripped off if they follow and subscribe to the capital issue of SEAS,” with more accusations levelled at the Cyprus Securities and Exchange Commission for not investigating a possible insider trading issue when Amalia Vardinoyiannis (sister of the majority owner) bought SEAS shares at EUR 0.09 and subsequently sold at EUR 0.42, realising a cool EUR 7 mln profit, “on the back of unsuspecting investors.”

Ventouris further accused the CySEC of being lax with the SEAS rights issue and said there are many irregularities in the prospectus. He also questioned how SEAS purchased a 15% stake in another Greek shipping company, ANEK, which is controlled by Vardinoyiannis and the person who sold the 15% ANEK shares to SEAS was Amalia Vardinoyiannis, who pocketed EUR 58 mln in the process.

Asked by the Financial Mirror why he decided to come forward with the accusations last Friday (Nov. 9) when trading on the SEAS rights were suspended and just one day before the exercise period began, Ventouris said, “it took me time to investigate and prepare my file.”

In the meantime, a number of investors who bought rights at EUR 0.12-0.15 burned their fingers as the rights ceased trading at only EUR 0.01 and now they have to pay EUR 0.26 to exercise the rights into shares, at a time when the value of the shares is EUR 0.26.

Pressed by the Financial Mirror to state if his intentions could be related to the fact that Vardinoyiannis, ANEK and now Sea Star are all competitors of NEL, Ventouris said quite frankly, “of course, I view the plans to raise EUR 170 mln as unfair competition against NEL.”

Meanwhile, the SEAS camp maintained a total ban on statements, with a simple statement issued through the CSE that did not answer any of the allegations.

 

— Prospectus is clean

 

In response to the Ventouris allegations that the SEAS prospectus was not prepared properly and does not contain significant information on action taken from the time the six month results were announced until the capital raising issue started, SFS Group Chairman Christodoulos Ellinas hotly denied the charge and said Group member Sharelink stands by the way the SEAS prospectus was prepared and after approval from the CySEC, allowed to be made public.

Ellinas however, did not wish to make further comments on the matter.

However, an SFS official who wished to remain anonymous said in response to one of the charges made by Ventouris at the way Amalia Vardinoyiannis sold the 15% stake in ANEK to SEAS at EUR 2.50 per share, that since Vardinoyiannis has committed himself to subscribe EUR 61 mln out of the second issue of EUR 100 mln earmarked for institutional investors, it was decided with the consent of the CySEC that he be allowed a delay to receive the relevant shares until the whole issue was completed, otherwise there was a risk that the CSE takeover rules would come into play since his stake before the new issue would climb to above 51%.

“Vardinoyiannis paid EUR 30 mln in cash into a bank account in Greece in the name of SEAS, against which SEAS borrowed EUR 58 mln to pay for the 15% stake in ANEK, for which Vardinoyiannis has given further guarantees that the loan is safe,” said the SFS official.

 

— Vardinoyiannis new Chairman

 

The Financial Mirror has it from informed sources that Ioannis Vardinoyiannis will assume the chair of Sea Star Capital’s board next Thursday (Nov. 22) after the rights issue is concluded and all the new shares are issued, including those to which he subscribed to earlier.

The same source poured cold water on the allegations by Ventouris, which he said may only force a number of Cypriot investors not to participate in the rights issue. But since the board has the right to offer all unexercised shares to other investors, probably lined up in Greece, most of the issue will be successful without offering any tangible proof that this will be done, he added.

As for the allegations that Amalia Vardinoyiannis had insider knowledge when she bought SEAS (previously Megabet) and made a EUR 7 mln profit and later sold the ANEK shares, the same source said this is an issue for the CySEC to investigate and does not concern the company.

If the ANEK shares are marked to market as of November 7, then SEAS has a loss of EUR 8 mln on its stake, which is well above the total share capital of EUR 5.7 mln as stated in the prospectus, meaning that not only is SEAS loss making, but it has a negative net worth, Ventouris had claimed.

The same SFS source said that SEAS will probably use the equity accounting system, whereby it takes part of the profits of ANEK and is not concerned with its day-to-day valuation on the stock exchange.

On Monday (Nov. 12), ANEK reported record 9M profits of EUR 24 mln, which surpassed the total profit of 2006.

In response to a question by the Financial Mirror as to the correct valuation of ANEK and if it was worth EUR 2.50 per share, Ventouris said, “I don’t trust the management of ANEK and as far as I’m concerned, the ANEK shares should not be worth more than EUR 1 per share.”

 

— Other charges

 

Ventouris further alleged that part of the proceeds from the rights issue will be used for the payment of six ships of RO/RO type belonging to Costas Agapitos, leased by ANEK from Agapitos who also faces penalties of EUR 5 mln imposed by the Greek authorities for breaking the Famagusta port embargo.

The SFS source defending SEAS said no final agreement has been signed for the specific purchase and furthermore, if Agapitos with whom Ventouris is alleged to have other differences has been sued by the Greek state, then “that is an issue that will be settled in the courts”. He further pointed out that the alleged offence (port embargo) was made by the British charterer of the vessel and not by the mother company owning the ship.

At the time of going to press, the CySEC had not issued any statement to counter the allegations made by Ventouris.