Magnus corrects statements, says CEO has interest in Blue Water Malaysia

Singapore

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), which is leasing its Malaysia office premises and providing administrative services to Magnus.

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

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 the Malaysian firm.

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 with a half stake.

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

In addition, Magnus had appointed Mr Reudavey as a director of its subsidiary MEG Management Sdn Bhd 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 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 MEG's winding down is completed.

In June, Anthony Kuek and Ong Chin Yew separately resigned from Magnus' board. 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 likewise been renting part of its office space and providing administrative services to Magnus, and Mr Madhavan is a director and 50 per cent owner of BWEPL.

Mr Ong, meanwhile, was unhappy that Magnus was paying Mr Reudavey, who has been Mr Madhavan's business partner for two decades, to manage the MEG 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 admin 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 will continue paying fees to Mr Reudavey 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 continue to allow Magnus employees to use BWEPL's office at no charge.

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