Polo Resources Share Discussion Threads

[alch00] 14/3/2019 09:36

From the letter: "Fellow Polo shareholders supportive of a significant share buyback or distribution are encouraged to
contact us at [e-mail]."

If enough people do this, they can certainly make Tang change his ways; Tang doesn't have a majority as far as I know.

So jamesss1: depends on how much support they get, so tell them you support them!
888icb: same! :)

[888icb] 13/3/2019 23:33

As a long term Polo shareholder I endorse the comments in the Phrominos Capital letter above.

[jamesss1] 13/3/2019 23:28

What power have these shareholders got if tang gives them the fingers?

[st96dgx8] 13/3/2019 21:35

Phronimos Urges Polo to Respond to Shareholder Requests and Concerns

March 13, 2019—Subsequent to the publication of Phronimos Capital's (“Phronimos”) letter to the Board of Directors of Polo Resources (“Polo” or the “Company”), on February 13th, we have heard from numerous other Polo shareholders supportive of our cause and, consequently, the concerned shareholder group has grown significantly. We believe there will be broad shareholder support for a substantial cash distribution or share buyback if the proposal to return capital were put to a vote at a requisitioned meeting of the shareholders of Polo. Fellow Polo shareholders supportive of a significant share buyback or distribution are encouraged to contact us at [e-mail].

Phronimos transmitted a follow-up letter to the Polo Board of Directors today. The full text of the letter can be found below or at: www.phronimoscap.com/news

March 13, 2019

Polo Resources Limited
Craigmuir Chambers, P O Box 71
Road Town, VG1110
British Virgin Islands

To the Board of Directors:

We are disappointed with Polo’s response to the proposals put forth in our letter dated January 28th, 2019. We write to you again so that the Board and the Company’s shareholders fully understand our viewpoint and the reasons for our concern. We firmly believe the underlying value in Polo is significantly higher than the current share price and that the stubborn adherence to the Board's current investment policy is detrimental to the interests of shareholders as a whole. The market’s lack of faith in the stated investment policy is evidenced by the greater than 70% discount of Polo’s share price to its Net Asset Value (“NAV”) per share. The persistently large discount of Polo’s share price to net asset value precludes shareholders from realizing anything remotely close to its fair value through open-market transactions. The status-quo, which has resulted in significant realized and unrealized losses for past and present shareholders of Polo, is unacceptable. Consequently, we request that the Board:

1. Provide fellow concerned shareholder Nicholas Greenwood with the register of members within five business days. As you are aware, Section 100 of the BVI Business Companies Act grants shareholders a statutory right to inspect and make copies of the register of members. The Company has denied Mr. Greenwood’s request to exercise his statutory right, citing “data privacy” concerns. The right to inspect shareholder lists for the purpose of communicating with shareholders with regards to a proper purpose, being in this case the exercise of shareholder rights in the form of gathering support for a potential requisition of a shareholder meeting, is enshrined in company law. We urge the Board to respect this right.

2. Provide an explanation and/or the remuneration committee minutes regarding the appropriateness of Chairman Michael Tang’s total compensation (including the 2018 share option grant of 20 million shares at a greater than 70% discount to NAV.) We note that Chairman Tang’s consulting fees of ~USD 1 million per year from Polo Resources and its investee company GCM Resources is many multiples above the norm. According to BDO’s AIM Directors Remuneration Report 2018, the median average total salary for CEOs of AIM constituents was approximately GBP 150,000. The QCA Remuneration Committee Guide for Small and Mid-Size Quoted Companies states:
“Companies should communicate their decisions and supporting rationale clearly to shareholders and other stakeholders, most importantly through the report of the remuneration committee chairman. A company will face severe criticism if it rewards failure. Just as important is to ensure that mediocre performance is not rewarded as if it were good performance. It is fair that executives are offered the opportunity for higher levels of remuneration if they produce good results and excellent long-term sustainable value creation. Companies should avoid paying their executive directors more than is necessary to remunerate and motivate them. … No board should allow any executive director to be, or to consider himself or herself to be, irreplaceable: amongst other governance challenges that will inevitably arise, this may lead to demands for excessive remuneration.”

Furthermore, we note that in 2018, the Company issued share based payments granting Chairman Tang the option to purchase 20,000,000 shares at a greater than 70% discount to NAV. We believe the valuation methodology chosen by the Company significantly understates the fair value of the grant. The choice of a particular valuation method to determine fair value is not “fair and reasonable” if it does not take into account information material to the value of the corporation. With regards to investment companies (like Polo) in particular, the Net Asset Value per share is of paramount importance in determining “fair value.” Had the NAV per share been used to determine the fair value of the share based payment, we calculate the value of the grant to be ~USD 2.9 million (or ~USD 1 million annually considering that the options vest in equal instalments over a three year period.) Summing up the 2018 consulting fees and the share based payments using NAV as the fair value in pricing the options, total annual compensation for Chairman Tang was approximately USD 2 million (or GBP 1.5 million.) Even if we were to exclude Chairman Tang’s ~USD 400,000 salary from Polo’s investee company, GCM Resources, his total annual compensation of approximately USD 1.6 million (or GBP 1.2 million) is significantly above the median average total remuneration of GBP 248,000 for CEOs of companies trading on the AIM (as cited in BDO’s AIM Directors Remuneration Report 2018). As we stated in our previous letter, we do not begrudge management teams being adequately compensated when they have helped to create shareholder value. However, Chairman Tang’s significantly above market compensation (approximately 5-6 times the median) stands in stark contrast to the historical returns of Polo’s shareholders, who have witnessed c.80% decline in the share price and received no dividends or return of capital since his appointment in May 2013.

3. Engage in a thoughtful dialogue regarding potential financing to help unlock value for shareholders. Subsequent to the publication of Phronimos’ letter to the Board of Directors on February 14th, we have heard from other Polo shareholders supportive of our proposals, and, consequently, the concerned shareholder group has grown significantly. Furthermore, we have also heard from other investors willing to provide non-dilutive financing to help unlock value for Polo shareholders.

4. Provide shareholders with the time frame deemed necessary by the Board to evaluate any shareholder value unlocking proposals currently being contemplated.

We strongly urge the Board to respond to our requests and concerns without further delays.

Sincerely,
Sam John, CFA
Managing Member of Phronimos Capital, LLC
Investor Contact: Sam John ([e-mail]/[phone]/www.phronimoscap.com)

SOURCE: Phronimos Capital, LLC


Important Information
This document sets out the views of Phronimos Capital, LLC (“Phronimos”).
This document does not constitute a financial promotion of any kind by Phronimos or any affiliate, and the receipt of this document in no way renders you a client of Phronimos or any affiliate. The information contained in this document should not be construed as investment or tax advice, nor should it be construed as an invitation to purchase or sell any of your shares in Polo Resources Limited (“Polo” or the “Company”) (LON: POL). If you are in any doubt as to the action you should take, you should seek advice from an appropriately qualified independent financial or other adviser.
The information contained in this document (which may include price or other data) is for illustrative purposes only and may not be comprehensive or up to date. In preparing this document, Phronimos has relied upon and assumed, without independent verification, the accuracy, reliability and completeness of all information available from public sources. No responsibility is accepted and no representations, undertakings or warranties are made or given, in either case expressly or impliedly, by Phronimos or any affiliate as to the reliability, accuracy, timeliness, completeness or fitness for a particular purpose of information contained in this document or as to the reasonableness of any assumptions on which any of the same is based. Additionally, neither Phronimos nor any affiliate accepts any direct or consequential liability for any errors in or reliance upon the contents of this document. Neither Phronimos nor any affiliate will be responsible for updating any information contained within this document and opinions and information contained herein are subject to change without notice. Certain figures included in this document have been subject to rounding adjustments.
The release, publication or distribution of this document in jurisdictions other than the United Kingdom may be restricted under the laws of those jurisdictions and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.
Phronimos is not affiliated with Polo. However, as at the date of this document, clients of Phronimos hold a long position in shares of Polo. We acquired interests in the securities of the Company based on the belief that such securities, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to Phronimos, and the availability of securities of the Company at prices that would make the purchase or sale of such securities desirable, Phronimos may seek to increase or decrease its clients’ long position in the Company.

[russman] 13/3/2019 13:51

Need a £10m cash float in the holding company.
Topslice investments or secured loan.
Tender at 8p; Tang and his mates would not tender.
Tang has appeased the minorities.

[jamesss1] 12/3/2019 21:17

Can you elaborate?

[russman] 12/3/2019 15:15

Topsplice some holdings.
Tender at 8p a share.
Tender for 100%.
Minorities will be shafted.

[jamesss1] 08/3/2019 12:00

I dont think he cares at all.He gets his pay he's happy.Yes he paid circa 40p per share but look how much he's paid himself upto now???

I'm out of here once I hit break even...ive been here years and nothing at all has convinced me he is a good leader and in it for the other company owners (share holders).
Granted we are going through challenging times however there is something fishy about the continued massive discount to NAV.

[russman] 08/3/2019 11:29

It is disappointing that Tang is unable to devise a change in company strategy to "appease" the growing concerns of minority shareholders.

[philjeans] 08/3/2019 10:02

Heading relentlessly NORTH.

A lot coming together here now.

[jamesss1] 07/3/2019 11:10

May have a read up on TMS to see what they are about

[alpal2] 07/3/2019 09:24

Typical Polo: RNS of new partnership in Tunisia but not a word about the shares in Chaketma stolen by TMS. I wonder if Tang has done any more due diligence on our new partner than he did before getting into bed with TMS.

Tang's incompetence doesn't stop him drawing his exorbitant salary.

[shawzie] 06/3/2019 09:19

Well perhaps the market has never bought into the GCM story and that is why Polo share price is where it is.

[888icb] 06/3/2019 09:12

Yes because the Chinese will fund it.

[shawzie] 06/3/2019 09:08

A group of HSBC Holdings PLC (HSBC) shareholders representing $1 trillion in assets either under management or stewardship have called on HSBC Bank to stop financing coal power projects in Bangladesh, Vietnam and Indonesia.
Does anyone think that there is value in GCM?

[888icb] 04/3/2019 23:30

Another positive update on Hibiscus this morning just 2 weeks after the last one.

[888icb] 04/3/2019 23:30

Another positive update on Hibiscus this morning just 2 weeks after the last one.

[willoicc] 04/3/2019 23:07

If POL start to sell their stakes in their investee companies, their share prices will drop like a stone.

[failedqs] 04/3/2019 09:15

Tang will never reduce his ridiculous remuneration package - he's going to drain every last drop of cash out of the business before he starts selling any assets

[888icb] 03/3/2019 18:09

I agree with your comments. I very much hope that GCM is about to see a major rerate.

[ceaserxzy] 03/3/2019 17:51

Considering that polo's major assets are good quality and very liquid in Hibiscus and gcm, the over 70% discount is not justified. The management should cash in some chips in Hibiscus and return some capital to its long suffering shareholders, which will instantly boost the share price and reduce the discount. The compensation package of the management (Mr. Tang mainly) should also be reduced to be aligned with its poor performance, and the company market value so that they have the incentive to reduce the discount and increase the NAV.

[888icb] 03/3/2019 14:51

Polo continues to hold its higher share price that we have seen in February as Hibiscus continues to do well,GCM is due to make a submission to the Bangladesh Government and there is some shareholder pressure being brought to bear to improve the share price
It’s about time we saw the massive discount to NAV reduced.

[philjeans] 28/2/2019 12:43

Pressure building...…...

[shawzie] 27/2/2019 16:08

Alliance News Correction -Capital was writing on behalf of clients and other concerned shareholders totalling 14%, not that its clients own 14%, of Polo...