Friday March 29, 2013

Frontken sees 2.7% block crossed at hefty 47.6 sen a share

KUALA LUMPUR: Frontken Corporation Bhd saw a block of 27.63 million shares crossed at 47.6 sen late Friday, which was a hefty premium of nearly 700% above the market price.

Stock market data showed the 2.72% stake, which was transacted in an off-market deal at 47.6 sen, was 41.1 sen above the current market price of 6.5 sen.

The company is involved in advanced surface engineering technologies such as thermal spray coating, PTA overlay, Electroless plating and dry-film lubrication.

However, on Feb 27, the company was in the news when it informed Bursa Malaysia of potential accounting irregularities noted in one of its wholly owned subsidiaries.

To recap, Frontken said Crowe Horwarth, which was appointed as the special investigative auditor, had noted the irregularities.

The first was a discrepancy in the revenue of up to RM5mil recorded in one of the suppliers' audited financial statements, being substantially less than the cost recorded in the subsidiary's books in relation to the purchase of goods/services.

The others are non-existent purchases of up to RM2.7mil, a non-existent tenancy entered with one of the suppliers, possible misappropriation of the subsidiary assets, non-existent transactions between one of the suppliers and the subsidiary, the overriding of internal controls and policies and procedures, and the misappropriation of funds of the subsidiary by senior management personnel.

The potential impact is about RM8.7mil, which have already been provided for in the accounts for the six financial years ended Dec 31, 2006, 2008, 2009, 2010, 2011 and 2012, it said.

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