3m shares in The Marketing Group have gone missing, founder claims
The co-founder of troubled Singapore-based holding company The Marketing Group has claimed a significant number of company shares have been taken by a lender and sold without permission.
In a tweet posted on April 13, Jeremy Harbour claimed the holding company had placed three million shares with a lender based in the US as a security deposit on a €16 million (S$24m) loan. The shares constitute just over 8% of the 31m shares currently in circulation.
Harbour, who founded TMG with partner Callum Laing through their Singapore-based private equity firm Unity Group, said the tweeted statement was intended to explain the public company’s plummeting share price over the last few months.
Shares in the publicly listed group of 17 small agencies are currently sitting at €1.16, down from a high of €9 last August.
Singapore agencies make up the biggest part of the company. Of TMG’s revenues, 39% come from Singapore, 32% from Australia and New Zealand; 15% from North America and 14% from Europe. Its Singapore agencies include Black Marketing, Creative Insurgence, One9Ninety,
Harbour was replaced as chairman and left the board of The Marketing Group on Friday. New director Don Elgie, who is Australia-based, has become the company’s new chairman.
Harbour claimed he was posting the statement as a shareholder, not as a spokesman for the company. He owns about 2% of the company’s shares. According to his post, the company is now set to take a costly legal case against the as-of-yet unnamed principal lender, who is based in the United States.
The statement can be seen below:
Many of you have reached out to me, as such I’d like to provide an update on the findings of the trading of TMG shares in 4Q2016. pic.twitter.com/pSRLLvC8tP
— Jeremy Harbour (@JeremyJHarbour) April 13, 2017
In the statement, Harbour told fellow shareholders that after the Sweden-listed holding company launched, it needed more funds, which he said would be used to seal deals when companies being acquired were not willing to accept shares in The Marketing Group.
He wrote: “As we worked on growing the business is became apparent that incorporating a cash component into transactions would be beneficial to building and protecting shareholder value.”
The TMG’s first annual report, published on February 28, reveals that the parent company finished its first financial year with current liabilities for the next 12 months of €4.5m. But it had just €45,000 in cash or cash equivalents in the bank.
Elsewhere in the accounts, that the wider group’s current liabilities including deferred consideration – which presumably consists of payments due to owners of agencies which joined the group – amount to €11.5m. Cash and cash equivalents amount to just €2.4m. The company has a further €500,000 (S$750,000) outstanding to a later date.
In his statement, Harbour suggested that the attempt to raise funds had gone badly wrong.
Arguing that the intention of the fund-raising was to make further acquisitions, Harbour wrote: “We decided to securitise some of our holdings in TMG in order to access external funding.
“ We explored this proposition with several lenders and finally entered into an agreement with a lender that operated in Washington, Hong Kong and Switzerland.
“The understanding was for the lender to provide a total funding of €16m – to be disbursed in several tranches. We pledged approximately three million shares with them as security for the first tranche which was supposed to be €5m.”
According to Harbour, share register company Euroclear told TMG that the number of shares being held by the lender had dropped. He said the lender claimed they were still held within its other financial institutions.
The lender then claimed, Harbour said, that somebody else was short selling the shares. Short selling occurs when a trader effectively gambles that a share price will go down in the future. Harbour said this claim could not be substantiated.
He added: “The lender only delivered approximately €2.2m of the agreed loan amount… we found out that they ultimately sold all three million pledged shares.
“We are building a full legal case. We have been warned by our lawyers this is a slow and expensive process.”
TMG has courted controversy since it first floated on a Swedish alternative stock exchange on June 9 last year. Positioning itself as a decentralised alternative to the traditional agency holding group model, the company’s share price inexplicably skyrocketed from €1.23 (S$1.80) to a high of €9 (S$13.3) two months after floating. Since then, the price has dropped to €1.18 (S$1.80) at the time of publication, making it worth nearly a tenth of its peak market capitalisation.
Mumbrella Asia has contacted Harbour for further clarification of his online comments, but received no response at the time of publication. TMG declined to comment.
I was just reading this and thinking what the fuck does this have to do with the once great business of advertising?
Absolutely f’all that’s what.
These carpetbaggers have raided and sucked out all the excitement from our business with their shady deals and lawsuits.
Chris Reed must be apoplectic…but on the bright side, his linkedin feed must be burning up.
ReplyWhat an absolute mess this is.
But as an original founder wouldn’t Chris Reed be benefiting from being on top of the ‘pyramid’? As Reed is fond of saying: “Where’s the downside?” Perhaps he is well covered.
It is the late joiners who will be screwed, although how they ever bought into this scheme is beyond me. They all appear to be very small, very niche agency startups. I can only guess they didn’t match their enthusiasm with some basic business training. Or maybe they should have read the advice given freely on Mumbrella 😉
ReplyI believe the Mumbrella comments in previous articles, despite the foulmouthness, deserve some credits for their skepticism and criticism.
In lights of the recent development I’d like to remind the crowd and readers that Unity Group (including Jeremy) are no longer a part of managing The Marketing Group, and the agglomeration model seems to have been abandoned as well. The group’s 17 agencies remain the same with a new board that is entirely new consisting of senior members from the industry.
I’m not intending to defend any parts here, only sharing relevant information to avoid general bashing in the wrong direction.
ReplyAs long as Chris Reed is involved I will continue to be sceptical.
If TMG wants to make a real statement they need to distance themselves from him.
ReplyYou’re right Amgine. Although this “news” is two weeks old it underlines the incompetence of the previous management. I don’t envy the new Boards task but the early signs are positive. But that’s not fuel for the trolls is it?
ReplyHello there,
Thanks for the feedback. You’re right that the tweet was posted a couple of weeks back indeed, but TMG formally handed over to the new board at the AGM on Friday, so we felt we had a current angle to press ahead with. We’ll no doubt have more on this story in the coming weeks following the board changeover.
Take care,
ReplyEleanor (editor)
Then the new management should speak up and address the record of previous management who, let us not forget, derided the marketing communications sector in a series of know-it-all media commentaries where we were advised that we new nothing about scaling our businesses, collaborating across borders to support clients, nor generating a return for our efforts. Laing had the gall to compare TMG with WPP for goodness sake. Fair enough that this pump and dump is unraveling and the new crowd deserve the chance to get on with things, but calling out for these comments is not trolling, particularly given the money involved. And it is our business because TMG chose the path of a public company and that brings with it a level of scrutiny.
ReplyAs mentioned months earlier, TMG approached us – we declined as they appeared so dodgy and just bragging about what they owned, who they knew. Very tacky and greasy people. Thankfully we said no – mainly a combo of common sense and intuition. Read with a lot of interest the bravado of the parties in the group talking about their amazing performance and grand plans and how much they were valued at, we laughed secretly at their foolishness because anyone could see that this was a disaster waiting to happen. Good luck people – hopefully some of you were smart and cashed out – or wait, you are disallowed to based on the terms of the “deal” – methinks the only one benefitting from this is JH and his clan. If you google, you’ll see this isn’t the first time he’s done this. “Slow and expensive” legal process – guess who has to pay? Suckers.
ReplyWhere is chris reed now? Someone tag him please
Reply€1.23 (S$1.80) to a high of €9 (S$13.3) two months after floating. Since then, the price has dropped to €1.18 (S$1.80) losing nearly a tenth of its market capitalisation.
???
You mean it lost 90% of market cap? ie it’s down to a tenth of it’s market cap at peak?
ReplyPotentially: Market abuse. Misleading statements and creation of false or misleading impressions. Insider dealing?
Jeremy Harbour Twitter message leaking insider info from “one shareholder to another”.
Take advice. I would, but thankfully not holding shares.
ReplyWhat Jeremy harbour claims has no upside for the lender, unless the lender realises the loan was not repayable and therefore, call the loan and claim the collateral when payments cannot be made on time…
ReplySee, he’s still babbling on LinkedIn…
Infamy to NASDAQ CEO – my personal brand journey
Reply?
Agree with all comments here. They mis-sold the product to many companies and made promises of cash. There are many of the entrepreneurs that are still awaiting payment but like all scam artists, they are silent. The were milking the cow from all angles.
Stock went to Euro 9 and now is a ‘penny’ stock. Yet they made a nest egg for themselves off the misery of others. They left TMG – after screwing it all up and now are working on new scams in other markets.
Watch out for Aggolmeration – you’ll loose everything.
ReplyIt looks a perfect scam.
ReplyIf you look at YouTube videos, you cry laughing.
He explains how to buy company without cash.
The whole TMG setup looks like a scam. We also had conversations with TMG and they seemed pretty clueless and chancers at best. The new board don’t stand a chance of recovering. The damage is done and surely this company will be delisted soon.
ReplyFeel bad for the genuine investors and people who sold their companies but can’t helping thinking that those on the inside and at the top of the pile have profited out of this and it was the intention all along!
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