Part 2: bdnews24.com serves legal notice on BRAC EPL on valuation denial

bdnews24.com has served notice on BRAC EPL Investments Ltd and its CEO, asking for a public admission that it had prepared a valuation report for the news publisher.

Supreme Court lawyer M Noman Hossain Talukder on behalf of bdnews24.com and its Managing Director Toufique Imrose Khalidi sent the legal notice to the offices of BRAC EPL Investments in Gulshan and its CEO on Sunday.

Deedarul Huq Khan, CEO of BRAC EPL Investments, refused to comment on the notice.

Since there was a “good relationship”, bdnews24.com had approached BRAC EPL for a valuation report to present it to potential equity investors to raise funds, according to Advocate Talukder.

After many meetings, consultations and receiving various data and documents, BRAC EPL sent draft versions of information memorandum of bdnews24.com since signing a non-disclosure agreement on Apr 3, 2017 “clearly” stating that the draft was prepared for the potential private equity investors.

“You also asked for further documents from my Client vide those emails which our Client provided to you accordingly,” the lawyer said in the notice.

BRAC EPL sent another email on Feb 20, 2018, attaching the revised information memorandum of bdnews24.com with the valuation of $46 million.

“You specifically mentioned in the said email that the additional value from the previous version came from the revenue of bdnews24.com jobsite and slight increase in revenues from other areas of business. You further stated in the said email that you have used Discounted Cash Flow Method (DCF) to identify the value of the company.”

bdnews24.com relied upon the revised information memorandum and approached several potential investors and submitted the valuation report to them and held negotiations with them.

Ahead of another round of negotiations with one of the interested parties in September 2019, bdnews24.com asked for an updated ‘offer memorandum’ and valuation report, which BRAC EPL provided to the news publisher by email on Sep 5, 2019.

Based on the BRAC EPL valuation report, fund manager LR Global Bangladesh became interested to make investment in bdnews24.com and conducted negotiations and eventually made investments in bdnews24.com.

Part 1: Was bdnews24.com share price abnormal, imaginary?  

All for journalism!  

ACC prosecutes bdnews24.com Editor-in-Chief Toufique Imrose Khalidi on charges of ‘illegal wealth’  

“During negotiations with interested parties, our client presented your valuation report which played a role of  ‘conversation-starter’ with them, in this case LR Global Bangladesh Asset Management Company (LR Global), which conducted negotiations with our client considering many aspects of  bdnews24.com including your valuation report and eventually made investments in bdnews24.com,” Advocate Talukder wrote in the legal notice.

The news publisher became aware “all of a sudden” of an Anti-Corruption Commission case, which was initiated on Jul 30, 2020, and “clearly” stated that BRAC EPL and some of its senior officials denied in writing that BRAC EPL “never issued any valuation report on bdnews24.com to our Client whereas you specified clearly in your emails that you have prepared the said valuation report for potential investors of bdnews24.com”, the lawyer said.

“It seems that you most illegally and unlawfully are trying to contradict your own statements and avoid your liability from the valuation report prepared and submitted by you to bdnews24.com which bdnews24.com relied upon and forwarded to the potential investors,” he added.

Deedarul Huq Khan, CEO of BRAC EPL Investments, refused to comment on the notice

BRAC EPL also sent a letter to Bangladesh Securities and Exchange Commission on Dec 8 in which the company “clearly mentioned and admitted” that it prepared the draft information memorandum for bdnews24.com back in 2018 as bdnews24.com was discussing with one foreign investment company to include that as its strategic partner.

“The said statement clearly indicates your admission and confession of preparing the said valuation report.” As such, BRAC EPL “cannot deny or refuse to admit” that it prepared the said valuation report of bdnews24.com, according to the notice.

The lawyer described as “completely illegal, unlawful and mala-fide” BRAC EPL’s denial that it has never prepared the valuation report even after sending the report to bdnews24.com via several emails. It also indicates BRAC EPL’s “mala-fide intention to gain illegal benefits”.

“Moreover, by doing this, you shamelessly resorted to unfair practices to harass not only my Client but also the investor which invested in the Company (bdnews24.com) with the mala-fide intent to adversely impact the reputation and business of bdnews24.com.

“Due to your such illegal and unprofessional acts, my Client incurred huge amount of financial and reputational losses,” the notice said.

It asked BRAC EPL to withdraw the statement in which it denied preparing the valuation of bdnews24.com, admit to preparing and submitting the report publicly and to the relevant authorities.

The lawyer said BRAC EPL will face legal proceedings if it does not fulfil the demand within seven days from receiving the notice.

bdnews24.com called Deedarul Huq Khan, CEO of BRAC EPL Investments, to find out why he denied the valuation report to the ACC, but he refused to comment.

A spokesperson for bdnews24.com said Asif Mahmood was the chairman of Bangladesh News 24 Hours Ltd when BRAC EPL was working on the valuation report. He was present at every meeting with BRAC EPL CEO Khan. They have known each other since their college days.

There has been an NDA between bdnews24.com and BRAC EPL. BRAC EPL created an IM and updated that document for discussions with investors. Why are they now denying? Are they working under any pressure?

Is BRAC EPL working under any pressure? Asif Mahmood says: “It could happen."

In response to these questions, Asif Mahmood told bdnews24.com, “It could happen. And it could also be under pressure. I don't know.”

Asif Mahmood left the company in May 2019 after selling shares in bdnews24.com. In September of that year, bdnews24.com started discussions with Reaz Islam, CEO of LR Global.

The ACC in the case charged bdnews24.com’s Editor-in-Chief Toufique Imrose Khalidi with gaining “illegal” wealth, an allegation he consistently denies.

The ACC case states that Khalidi sold 20,000 of his shares in bdnews24.com for Tk 250 million and raised another Tk 250 million from issuing another 20,000 shares to LR Global.

The commission alleges that the actual value of the 40,000 shares is Tk 4 million, but each was sold at Tk 12,500, with Tk 12,400 as premium.

But, according to BRAC EPL IM, bdnews24.com was valued at Tk 3.71 billion, which meant each share was valued at Tk 37,100.

The case alleges the asset valuation report was “fake” and out of the Tk 500 million investment, Tk 420 million was deposited into different bank accounts.

The bdnews24.com spokesperson said the money was “actually set aside in different FDR accounts to be used as and when necessary to clear remaining unpaid allowances of employees and vendor payments as well as pay contractors for upgrades and expansion with whom negotiation had just begun”.

“All the plans based on the investment had to be shelved, which put bdnews24.com in serious trouble with long-term consequences,” the spokesperson said.

Toufique Imrose Khalidi says he can only hope that the judicial process will be allowed to function properly. "I have no doubt at all we will come out squeaky clean.”

But the ACC said: “Toufique Imrose Khalidi obtained the movable asset in an illegal way, which is inconsistent with his known income.”

In a January article, Khalidi detailed the circumstances under which bdnews24.com entered the deal, where the money was, why he himself sold some of his shares and what happened after the deal.

“The small — yes, small given the requirement of Bangladesh’s largest news publisher for its stability, growth, expansion, upgrades and above all liabilities accumulated over the years due to hostile treatment by a section of the advertisement industry operatives who wouldn’t budge unless you responded to their PR requests as well as others I would rather not specify at this stage — investment meant a lot to us. That would explain why a share valued at Tk 37,100 was dispensed for only Tk 12,500. We needed to clear unpaid salaries of colleagues, for many of whom the company was several months behind regular payment schedule,” he wrote.

Negotiations with LR Global began in full swing on Sept 12, with an updated BRAC EPL information memorandum valuing bdnews24.com at Tk 3.71 billion. In the article, Khalidi narrated chronologically detailed events that led to the deal and the ACC inquiry.

Earlier, an NDA was signed with BRAC EPL on Apr 3, 2017 to start initial work. An information memorandum produced after months of work between the bdnews24.com board or management and the BRAC EPL team valued bdnews24.com at $46 million (Jan-Feb 2018).

Read the story in Bangla