A Multi-bagger if ever there was one!!! once this hits the papers, see it double.. treble...see announcement

superrod, That's one hell of a thread!

Any quick appraisal would be much appreciated.

dont know about the rest of you guys, but im not convinced ( especially after that savage mark down ), that all is as rosy as it looks.
i had been quoted 73.3 to sell most of the day.

Scrip,
the main thrust is that CC has cash worth 3 to 4 times the shareprice in brazil and they are in the process of transferring it to europe.
there are some who are saying they have ASSETS of 240p a share, which would appear to not be the case from the recent announcement ( thank God ). companies with assets can realistically write of 75% if they ever need to sell them. we are talking about HARD CASH here.
i live in hope.

This is where some of Crown's cash is going.

EDIT: On reading all the recent RNS, it appears that CCO's Brazilian deposits are NOT being used for this JV, which will instead be funded by new money to be raised by CCO's recently acquired subsidiary from its new Chairman/CEO Sturart Pearson, Langbar Capital International. So the JV has no cash currently.

MOS International plc

Joint Venture Agreement

MOS International plc, ("MOS"), the oilfield services business, announces the
signing of Heads of Terms for a joint venture to be entered into with Crown
Corporation Limited ("Crown"). Crown is an AIM listed investment company.

International Drilling Corporation ('IDC'), the joint venture company, in which
MOS and Crown will each have a 50% interest, will commission the building of oil
rigs and major capital projects connected with the drilling and exploration
industry.

There is a strong demand for new oil rigs and this is expected to remain high
for the foreseeable future. IDC will not be commissioning the building of any
major structure without pre-signed leasing or purchase agreements.

Crown is to raise the project finance for IDC whilst MOS will provide project
management and industry expertise.

As part of the arrangements, Philip Wood, Chairman of MOS, who recently joined
the Crown Board as a non-executive director, will take specific responsibility
for driving this new initiative.

Philip Wood, Chairman, MOS International commented:

"This new venture is complementary to our existing business and means we will be
able to utilise the product knowledge MOS possesses. Crown can provide the
financial backing, and combined with our in-house expertise and worldwide
contacts I believe that we can develop a substantial business that will provide
good returns to both parties".


22nd June 2004

Philip Wood was until recently also Chairman of Emerald Energy with big oil interests in Colombia. Not so far from Brazil - and he's a shrewd operator. So it wouold appear that Crown's cash is genuine, although we do not know how much is being committed to MOI.

MOI's SP has been languishing sub-1p for a while now in spite of a well-orchestrated overhaul of the company by PW. Given the oil boom, MOI is a punt on the "shovels-not-gold" type of investment philosphy to which I am a subscriber.

sd

How cheap ?

Sunday Telepgraph
7th August 2005


Edward Simpkins investigates how an Aim-listed company discovered $660m in a Brazilian bank account - and its connection with Lambert Financial, a nominee for 2,000 Israeli emigrpensioners

It is not often that a chief executive discovers hundreds of millions of dollars sitting in a company bank account. But that was the nice surprise that greeted Stuart Pearson, the CEO of Crown Corporation, and his boardroom colleague Philip Wood when they flew to Brazil in June.

At the offices of Banco do Brasil in Sao Paolo, they were given confirmation that the business they had both joined only recently was US$659.6m (371m) in credit.

The bank provided a written statement that the funds existed and were available for Crown Corporation to withdraw - although the cash is supposed to stay in Brazil or Argentina, under local currency control restrictions.

Exactly how Crown, which has few other assets, came by that money is an intriguing tale about one of the strangest companies listed on London's Aim market.

A fortnight ago, Pearson - a jovial Yorkshireman who retired last year as a partner at Baker Tilly, the accountants - spelled out at Crown's annual meeting in Monaco just how undervalued the company's shares appear to be.

At the meeting he presented a balance sheet for Crown that claimed net assets in excess of 350m - including cash deposits of 360m. As Pearson pointed out, shares in the company, which closed on Friday at 68.5p, down from 875p in December 2003, appear to be a massive bargain.

"We have approximately 155m shares in issue, which equates to 225p per share," he said, adding that at the then price of 62.5p the company was worth just 97m, less than a third of the value of its cash deposits.

And before the money showed up at Banco do Brasil at the end of May, the shares were trading at just 11.5p.

However, investors can probably be forgiven for being cautious about this business, which says that its domicile and headquarters are in Bermuda. Since it was listed in the UK two years ago as a shell company dedicated to making acquisitions, it has failed to make a single investment of any substance. But huge amounts of cash have moved through the company's accounts.

"It is not a money laundering operation, I'm fairly sure of that," says Pearson. "But it is certainly very bizarre, there's no denying it."

When Crown announced, on October 30 2003, that it was to list it described itself as the brainchild of Mariusz Rybak, who was then the executive chairman of Crown, and Wolfgang Menzel, then the chief executive. The pair had raised 150m, allegedly from European institutions, in order to invest in and manage undervalued public companies "primarily in the Canadian and US marketplaces".

But just a few days later, on November 10 2003, they announced an extraordinary deal that seemed to have little to do with those intentions. The company said it had signed construction and civil engineering contracts worth $633m to build houses and install waste management and water treatment infrastructure in Buenos Aires, the Argentine capital.

At the time the company said the deal was in line with its strategy because it intended that the contracts should be fulfilled "largely by companies in which Crown plans to take substantial equity interests".

Rybak explains there was a "deeper strategy" behind winning the contracts. "There were a couple of publicly listed Canadian construction companies with highly depressed market capitalisations," he says. "The idea was to acquire the contracts and then acquire the companies. We had several discussions with our advisers about it."

However, he says that news of their interest leaked into the Canadian market and that the value of the target companies leaped by around 25 per cent. "We didn't want to chase companies that were already aware of our interest," Rybak adds.

So how did this cash shell, which was looking for opportunities in the US and Canada, win a huge contract to build 14,000 houses, nine industrial parks, two commercial centres, three complexes of municipal buildings and two hospitals in Argentina?

The answer was in a note to the announcement. "Lambert Financial Investments Limited, acting as a strategic adviser to Crown, has been instrumental in opening the Latin American market and securing the contracts for Crown," it said.

Pearson elucidates: "Lambert has very good contacts with the Argentine government and it tipped them off. They were effectively PFI contracts [or business linked to the government]."

Lambert wasn't just any old adviser. It was also the biggest shareholder in Crown, with a 59.14 per cent stake (as of June 2004). When Crown listed it had issued 41.4m shares to Lambert in exchange for a certificate of deposit issued by the Banco do Brasil to the value of $275m.

However, other than winning the Argentine contract the company did little during the months that followed.

It set up a subsidiary called Crown Oil Corporation, which, it said, had agreed non-binding heads of agreement to acquire, for 235m (164m), the right to build a natural resources transhipment terminal and a gas pipeline in Russia. Barry Townsley, the chairman of Insinger Townsley, Crown's broker, was to join as deputy chairman of the subsidiary.

Rybak says that it was the restrictions on removing currency from Brazil that made it difficult to invest as widely as it had hoped. "If we had borrowed against the cash deposits it would have been at such a discount that it limited what we could do," he says.

Then something unusual happened. In June 2004, just when the Buenos Aires construction contracts were due to commence, Crown announced that it had sold them on for $350m. Later that month Rybak explained that the plan was to reinvest that cash into the Russian oil and gas projects.

And who was the buyer of the Buenos Aires construction contract? None other than Lambert Financial Investments, Crown's adviser and majority owner, which had helped it acquire the contracts in the first place.

Lambert paid with a $350m promissory note issued by the Banco do Brasil. As the company noted at the time, "the gross profit to Crown is equivalent to the consideration". Or to put it another way, in just seven months Crown had made a profit of $350m by winning the contracts with the help of Lambert and then selling them back to Lambert.

The other strange thing is that the contracts - $633m for one and $75m for a separate security contract - were sold for around half their combined value of $708m. That implies a profit margin of 50 per cent, which is extremely high for the construction industry.

Pearson explains: "What I understand is that Rybak thought he would be able to find a construction partner, but in the event he failed to do so. Lambert agreed to find a new buyer for the contracts but on the condition that it would have a year before it paid for them to try and sell them on.

"I don't think anyone believed they would be moved on in time and that the promissory note would be met," Pearson says. But the note has in fact been redeemed - which is the reason all that cash is sitting in the Sao Paolo account.

Pearson asks a challenging question: "Was it a proper contract or was it some kind of money laundering exercise?" He is convinced it's all above board.

"What were they laundering? The money certainly wasn't criminal in origin and if they were trying to get the money out why did they put it into the Banco do Brasil? It didn't have any advantage, it was a nightmare for them really," he says.

Rybak admits that he was concerned the transaction was unusual enough to raise suspicions of money laundering. "This was an issue for us and we worried that banks would be uncomfortable with that," he says.

But he says there was no financial benefit to Lambert from the original award of the contracts. "Lambert was not involved in the contracts directly," Rybak says.

So just who is Lambert Financial? According to Pearson, Lambert is a nominee for around 2,000 Jewish pensioners who are mostly settled in South America. "It is a fund manager for a lot of ex-Israelis who've come to South America. It is based in Barcelona," he says. Rybak adds that he carried out substantial due diligence into Lambert and was perfectly satisfied with what he found.

As for Rybak, he resigned as a director of Crown on June 6 this year, the day Pearson was appointed. Pearson says he was approached by Rybak himself earlier this year - and that he was originally asked simply to provide advice on how to restore confidence in the company.

Since taking over, Pearson has promised to redouble efforts to find something to spend all that money on and he will increase the focus on UK opportunities.

"The main mission now is to get this cash out of South America through asset swaps," Pearson says. "We are looking at assets in Portugal now - a lot of land, casinos, hotels, and a golf course near Lisbon."

However, the Banco do Brasil is majority state-owned and is keen to see as much of the deposit as possible reinvested in Brazil. "It is a large dollar deposit and it is pretty clear the government wants most of the cash to stay in the country," Pearson says. "There will be a political solution I think. . . We'll probably have to buy a gold mine, which is fine. I don't mind doing that."

Go for it Stuart. I wouldn't mind buying a gold mine either.

sd

it does scream "to good to be true"!!! but ......

What a bizarre and curious story. Sunday Telegraph peice is very revealing if true. Very unusual set of circumstances. Are the Brazilian government going to let all that money nip out of their economy? I guess an asset swap securitised on the cash would probably be the best way to 'transfer' the value out, as long as somebody underwrites it.

gonna be a scary ride this week.

the jury is out imo whether the Telegraph article will have buyers or sellers queuing up tomorrow.
im hoping for buyers.

does seem odd that cco "found" this huge wad of cash and didnt know it was there. on the other hand i found an old building society passbook the other week with just over 70 in it. took it to the woolwich who confirmed it was a dormant account ( over 6 years ) and after a bit of form filling i got the cash......WITH interest.

guess how much for 70 in 6 years?

13p less 2p tax.

glad to see that cco is doing rather better.

From the Telegraph:

A fortnight ago, Pearson - a jovial Yorkshireman who retired last year as a partner at Baker Tilly, the accountants - spelled out at Crown's annual meeting in Monaco just how undervalued the company's shares appear to be.


At the meeting he presented a balance sheet for Crown that claimed net assets in excess of 350m - including cash deposits of 360m. As Pearson pointed out, shares in the company, which closed on Friday at 68.5p, down from 875p in December 2003, appear to be a massive bargain.

"We have approximately 155m shares in issue, which equates to 225p per share," he said, adding that at the then price of 62.5p the company was worth just 97m, less than a third of the value of its cash deposits.

And now it's better value! Must be THE most Overlooked share at the moment but for how long???

Hi All,

Everyone is missing the other point, 25m in interest per annum !!!!

That alone is an EPS of 16p per share, if CCO had a respectable EPS of 20, the S.P would be 3.20, and looking at the NAV, that would be more realistic than 65p ....

Cheers,
PM

Paul - is the interest any more repatriable than the principal? Agree with the arithmetic, but it's got such a dodgy history. As Bosley said, if it looks to good to be true . . . .

sd

SD Hi,

The interest is acumulating now, and when the money is extracated from Brazil, the interest earned will come too.

We will se how 'good to be true' it is, when the money is exchanged for assets outside Brazil, and the price rises to somewhere near 2 or more.

I will wait this one out, rather than miss out, because a suspension and rerating are on the cards, if the price don't move when the money is out of Brazil.

Cheers,
PM

what do you mean by suspension on the cards,is this why people are selling to keep there money in tact and buy back in later when the news does arrive.

Once they get confirmation that they can withdraw the money, the shares would go through the roof and I think what Paul means is that the shares may get suspended as is often the case where the value of the co.is so highly effected by turn of events. The shares would then resume trading but at a much higher amount.

ive dumped mine......made 9.98 after expenses. had i waited another day id be sitting on a loss of 450. the old ticker cant handle this kind of share.

ateeq Hi,

Rob is correct, but there is also the very high probability, that if the price does not go through the roof, Crown Corp will ask for the shares to be suspended, and request a rerating, after which they will resume trading at a much higher value.

You can tell from the AGM statement, that the directors want the true value of the Brazil cash reflected in the S.P, and a rerating will do that, if the news does not :)

Cheers,
PM

as a matter of interest, suppose i took out a T10 tomorrow and the shares were subsequently suspended. where would i stand wrt settlement?

WHY ARE WE ALL THINKING ABOUT SUSPENSION,LETS HOPE EVERY THING IS CRYSTAL CLEAR WITHOUT THAT WITH A GOOD RNS.

LOL !