HAS THE PUBLIC BEEN DUPED?
By Paul Rees – Algarve Daily News
It is the definition of ‘exclusive control’ that
now is worrying the financial and motor racing sectors, keen to see
the racetrack succeed under new ownership and new directors, but are
new brooms sweeping clean?
If Portugal Capital Ventures owns 100% of
Parkalgar, as it has let everyone believe, including the Autoridade
da Concorrência, then why are there numerous shareholders listed on its
share register with not one of them listed as 'Portugal Capital Ventures'?
The shareholding schedule is a mess of detail with Autodromo International do Algarve owning 1.3 million Category ‘A’ preferential shares but with no note as to what powers these shares have. There are the original nepotistic junior shareholdings, Parkalagar and builder Bemposta are family affairs after all, which may explain why every creditor has taken a haircut apart from building company Bemposta. The Portimão based builder of the autodrome was owed €10.3 million before the recent financial restructuring and was still owed €10.3 afterwards. The family relationship between Parkalgar and Bemposta with directors owning shares in each was not good practice in a project of this scale and ‘national importance.’
The shareholding schedule is a mess of detail with Autodromo International do Algarve owning 1.3 million Category ‘A’ preferential shares but with no note as to what powers these shares have. There are the original nepotistic junior shareholdings, Parkalagar and builder Bemposta are family affairs after all, which may explain why every creditor has taken a haircut apart from building company Bemposta. The Portimão based builder of the autodrome was owed €10.3 million before the recent financial restructuring and was still owed €10.3 afterwards. The family relationship between Parkalgar and Bemposta with directors owning shares in each was not good practice in a project of this scale and ‘national importance.’
Even the bankers BCP took a hit, as did the
common creditors including Formula One boss Bernie Ecclestone (€3.2 million
owed to his company GP2 Ltd), Oceanational Motor (€4.9 million – owner of the
Portuguese Ocean Racing Technology team of which Tiago Monteiro is the public
face) and Infront Motor Sports Organisation (€1.3 million – Superbike World
Championship organisers) along with local companies that had the financial
misfortune to work on the Autodrome project.
There is also an unexplained change in the articles of association of the company which is not made clear, and there is no note of to whom the last two capital increases (€4,491 and €9,988,272) were issued, taking the total capital issued to €11,372,368.
So the ownership appears not to have changed at all and therefore deep suspicions exist as this could be similar to many of the ‘deals’ by private equity firms similar to Portugal Capital Ventures where leveraged buy-outs of companies are announced with fanfare but using no real money, with ensuing kickbacks and cushy jobs to public officials. Later any real assets, land in this case, are transferred to the new company while leaving the ‘loans’ in the lap of the hapless and impotent taxpayer.
There is also an unexplained change in the articles of association of the company which is not made clear, and there is no note of to whom the last two capital increases (€4,491 and €9,988,272) were issued, taking the total capital issued to €11,372,368.
So the ownership appears not to have changed at all and therefore deep suspicions exist as this could be similar to many of the ‘deals’ by private equity firms similar to Portugal Capital Ventures where leveraged buy-outs of companies are announced with fanfare but using no real money, with ensuing kickbacks and cushy jobs to public officials. Later any real assets, land in this case, are transferred to the new company while leaving the ‘loans’ in the lap of the hapless and impotent taxpayer.
While not wishing to judge until the facts are
made clear, the famous quote by F. Ross Johnson, former president of RJR
Nabisco, comes to mind: "Never play by the rules, never pay in cash and
never tell the truth." Let's hope Portugal Capital Ventures is not
playing by the RJR Nabisco rules. Of course, Johnson could have added
another mantra, "Make sure, in
any deal, we get most of the profits while costs end up with someone
else."
The above lines are not accusations, they are warnings. The point is that the devil should never be in the lawyers' detail; any relevant and important information should be explicit and understood by anyone who is numerate and literate. It seems that many modern press announcements by venture capital companies are designed to mislead or leave out key details, rather than to inform. The public could get the impression that CEOs of private equity firms imagine that the general public are just plain stupid.
As for the current Parkalgar shareholders list, it defies commercial logic to retain the services of Paulo Pinheiro as a director of the ‘new’ Parkalgar. He was the director under whose directorship Parkalgar needed rescuing twice, first in a formal Processo Especial de Revitalização de Empresas where small, and not so small creditors were railroaded by Bemposta and bankers BCP to agree to a deal whereby they were to receive a small percentage of their money, money (30% paid only after the apartments began to be sold off i.e. spread over many years.) Secondly in the latest rescue by Portugal Capital Ventures whose triumphant arrival was ostensibly to take control of the business, restructure and manage it properly, and probably sell it on to a company with experience in running this type of composite business which includes a racetrack, real estate, an hotel, a kartodrome, and a planned technology park.
The above lines are not accusations, they are warnings. The point is that the devil should never be in the lawyers' detail; any relevant and important information should be explicit and understood by anyone who is numerate and literate. It seems that many modern press announcements by venture capital companies are designed to mislead or leave out key details, rather than to inform. The public could get the impression that CEOs of private equity firms imagine that the general public are just plain stupid.
As for the current Parkalgar shareholders list, it defies commercial logic to retain the services of Paulo Pinheiro as a director of the ‘new’ Parkalgar. He was the director under whose directorship Parkalgar needed rescuing twice, first in a formal Processo Especial de Revitalização de Empresas where small, and not so small creditors were railroaded by Bemposta and bankers BCP to agree to a deal whereby they were to receive a small percentage of their money, money (30% paid only after the apartments began to be sold off i.e. spread over many years.) Secondly in the latest rescue by Portugal Capital Ventures whose triumphant arrival was ostensibly to take control of the business, restructure and manage it properly, and probably sell it on to a company with experience in running this type of composite business which includes a racetrack, real estate, an hotel, a kartodrome, and a planned technology park.
Portugal Capital Ventures has
announced through the Autoridade de Concorrência that it controls
Parkalgar and hence the Autodrome and associated infrastructures and
partially built hotel and accommodation areas. Eyebrows were raised at the
approval of the takeover as the Autoridade da Concorrência must have known that
there are two other permanent circuit in Portugal – Braga, privately owned, and
Estoril, totally owned by Parpública Participaçoes Públicas, SGPS, SA, the
state owned company that manages assets on behalf of the public. If it
does not own Parkalgar's share capital it is hard for the public
to understand how it controls the business. If Portugal Capital
Ventures has somehow taken over the business without owning a single
share in Parkalgar, the public should be told.
The current mystery, and hence concern, over the actual ownership of Parkalgar, and the suspicious retention of a director under whose direction the business took several wrong turns, sets alarm bells ringing across the racing world and the financial industry in Portugal that does not need any further upset as it tries to rebuild confidence in the aftermath of the crisis and of various banking scandals.
The current mystery, and hence concern, over the actual ownership of Parkalgar, and the suspicious retention of a director under whose direction the business took several wrong turns, sets alarm bells ringing across the racing world and the financial industry in Portugal that does not need any further upset as it tries to rebuild confidence in the aftermath of the crisis and of various banking scandals.
It should also set alarm bells ringing in
Portugal's political world as if this is a set up of some sort it
will inevitably end up with the venture capital company winning out
and the taxpayer being left with the bill.
This whole project has been smeared with a political brush since the time of Jose Socrates' premiership and the partially successful under-the-counter funding of the Tiago Monteiro racing team.
Portugal Capital Ventures needs urgently to explain its plans and the Algarve's MPs need to start asking some detailed questions in parliament as to how a venture capital company can ‘rescue’ a business, announce complete control yet seem not to own a single share.
This whole project has been smeared with a political brush since the time of Jose Socrates' premiership and the partially successful under-the-counter funding of the Tiago Monteiro racing team.
Portugal Capital Ventures needs urgently to explain its plans and the Algarve's MPs need to start asking some detailed questions in parliament as to how a venture capital company can ‘rescue’ a business, announce complete control yet seem not to own a single share.
These questions are even more pertinent given
some of the recent scandals in the last few years, including the one involving
the purchase of three German submarines from Ferrostaal which was heavily
criticised by MEP Ana Gomes. Bribery of Portuguese middle men has been proved
in a German court yet nobody yet has been accused in Portugal.
With Parkalgar’s apparent maze of shareholdings
listed in the register, which seems to conceal more than it reveals, let's
hope there are no contracts with directors (or anyone else) that have
unforeseen consequences. Two appointments stick out from the list of
Parkalgar’s directors; Jaime Trindade Bernardes Costa of Buisiness Consulting
Services- Consultores de Gestao Lda, and Rui Luis Dias Pereira de Sousa from the
Lisbon School of Economics. Neither of these eminent men would seem to be from
the Venture Capital company although they may ‘represent its interests.’
The public needs clarity and to be assured that
this deal is not one where a few financiers will benefit and the public end up
footing the bill, followed by a public enquiry and assurances that this “will
never happen again.”
This is especially important in a deal
which seems to involve both private and public capital. It's not just a
question of who owns what now, it's primarily a question of who will own what
in the near future, including any profits, losses and share options – and
the land.
Who is looking after the interests of the 288
small creditors? Is is easier to run a business as complex as Parkalgar knowing
that if anything goes wrong the smaller original suppliers are way down
the creditors list and if the business fails again, the state, ie the taxpayer,
will pick up the financial pieces.
It will also be interesting for Portimão
ratepayers to know how much money its recklessly overspent council has
shovelled into the autodrome project, but we will leave that for another day
...
Copyright: Algarve Daily News
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