TFS rejects Ponzi claims

Indian sandalwood producer TFS Corporation has blasted US-based short-seller Glaucus Research Group for a scathing report which accused the Perth company of operating a Ponzi-like business structure.

The accusation formed part of a research report on TFS by Glaucus, which as an activist short-seller benefits from the fall in the share price of listed companies.

It compared TFS (which will be known as Quintis from tomorrow) to failed Australian agribusinesses Timbercorp and Great Southern which, like TFS, operated under a managed investment scheme model.

“We believe that TFS will likely follow Timbercorp and Great Southern into ignominy and failure,” Soren Aandahl-led Glaucus said.

“In our opinion, TFS’s model resembles such collapsed agricultural MIS companies and their Ponzi-like structure.

“We believe that once investors scrutinise TFS’s misleading forecasts, dubious marketing materials and questionable customers, TFS will lose the confidence of the capital markets it requires to survive.

“Thus, we value TFS’s shares at $0.00.”

Glaucus targeted TFS’s cash sources, arguing it didn’t generate much from sandalwood sales but instead relied on raising capital to fund growth and pay off its “ballooning debts”.

“Without access to the capital markets, TFS’s financial statements indicate it will struggle to service its debts, let alone repay them,” it said.

TFS aggressively denied the accuracy of the report, backing its business model and calibre of its institutional investors.

“The report is a self-serving report by a shorter of the stock in an attempt to drive TFS’s share price down for their own financial gain,” TFS said.

“There are substantial and egregious inaccuracies littered throughout the report which could have been avoided had the report’s author contacted the company.

“TFS’s plantations and shares are owned by some of the largest and most respected institutional investors in the world, investments they made after undertaking considerable due diligence.

“TFS also has a strong track record of meeting its financial guidance.

“The company reaffirms its guidance that FY17 cash Ebitda will increase by at least 25 per cent on FY16.”

Media reports last month hinted at Glaucus’s entry into the Australian market with two ASX-listed companies on its radar.

TFS shares were down 7.4 per cent, or 10.5 cents, to $1.31 at the close of trade.