Magnus Energy clarifies CEO actually has indirect interest in Malaysian firm

THE board of directors of Magnus Energy has corrected its earlier statements, to clarify that its executive director and chief executive officer (CEO) Charles Madhavan in fact has an indirect interest in Blue Water Engineering (M) Sdn Bhd (BWEM).

Previously, Mr Madhavan had said repeatedly that he had no interest in the Malaysian firm. Two directors quit last month because they disagreed with him on matters including payments related to BWEM.

In a bourse filing on Tuesday night, Magnus noted that Mr Madhavan actually owns a 50 per cent stake in Blue Water Asia Pacific Group (Blue Water BVI), which is the 100 per cent holding company of BWEM.

The CEO clarified this "pursuant to further queries by the sponsor and subsequent efforts made by Mr (Madhavan) to verify the information", Magnus said.

Blue Water BVI has an offshore marine business and was incorporated in the British Virgin Islands in 2009. Its two shareholders are Mr Madhavan and Anthony Reudavey, each holding a half stake. 

Mr Reudavey is also a director of BWEM, although Mr Madhavan is not a director of BWEM and Blue Water BVI.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

In addition, Magnus had appointed Mr Reudavey as a director of its subsidiary MEG Management in January this year, paying him a S$5,000 monthly fee for the role, to manage MEG's asset disposals, the shutdown of a microalgae plant in Malaysia, and the subsidiary's winding down.

Magnus has also been paying BWEM a S$2,000 monthly fee, for the rental of its Malaysia office premises, the rental of director's accommodations to Mr Reudavey and the provision of administrative services until the completion of the winding down of MEG.

In June, Anthony Kuek and Ong Chin Yew separately resigned from Magnus' board, citing disagreements with Mr Madhavan. For one thing, Mr Kuek noted then that BWEM's name was similar to Blue Water Engineering Pte Ltd's (BWEPL), and was not convinced that BWEM and BWEPL were not associated with each other. Singapore's BWEPL has been renting part of its office space and providing administrative services to Magnus, and Mr Madhavan is a director and 50 per cent shareholder of BWEPL.

Mr Ong, meanwhile, expressed his unhappiness that Magnus was paying Mr Reudavey, who has been Mr Madhavan's business partner for two decades, to manage the MEG microalgae plant closure.

On Tuesday, Magnus clarified that given the CEO's indirect interest in BWEM, the Malaysian firm is actually deemed to be an interested person. 

Therefore, the transactions entered into between Magnus and BWEM are in fact interested-person transactions (IPTs) under Catalist rules. Magnus mistakenly said on June 25 that there were only two IPTs - the BWEPL service agreement with a S$6,800 monthly fee, as well as professional fees paid to former director Christopher O'Connor.

Magnus said on Tuesday that the office rental and administrative services payments to BWEM will be terminated from July 1. However, BWEM will continue to provide the Malaysia office space and admin services at no cost until the completion of MEG's winding down and disposal process.

Magnus added that the payment of fees to Mr Reudavey will continue until MEG is completely wound up, which is expected to take place before November this year.

Meanwhile, Magnus' service agreement with BWEPL for office rental will be terminated from July 1. Nonetheless, Mr Madhavan will allow Magnus employees to continue using BWEPL's office at no charge.

Separately, Magnus on Tuesday said that the two properties in Australia and Singapore held by its subsidiary, Mid-Continent Equipment Group, remain on the market. It has not received a firm offer for the Loyang property, while the Queensland property has not had any prospective viewers.

Magnus also announced in an update that it has signed a non-binding heads of agreement with Taiwan's AREA Energy for a possible collaboration to jointly pursue the Australasian region for engineering, procurement, installation and commissioning projects, together with India's Oriental EPC.

Shares of Catalist-listed Magnus have been suspended from trading since August 2019.