Investors in Alser Forest bonds allege they were intentionally defrauded by the majority shareholder

Investors in bonds issued by Alser Forest SA, a company that recently entered insolvency, accuse that Albert Şerban, the majority shareholder of the company, intentionally led the company into insolvency in order not to return the borrowed money. The investors claim that, after developing the Alser Forest company including the money obtained through the sale of bonds, Albert Şerban together with his close associates, using the human resources and infrastructure of Alser, transferred the company's activity to several newly established companies of the type SRL. As a result of these operations, Alser Forest ended up making losses while the new companies made millions in profits in just a few months of activity.

Moreover, in the memorandum of the listing of the bonds at the Bucharest Stock Exchange (BVB) it was mentioned that, in case the company cannot return the money, there was a promissory note guaranteed by the majority shareholder of Alser Forest for the redemption bonds, the ticket being in the custody of the intermediary Intercapital Invest. However, according to the investors, contrary to what was mentioned in the memorandum, the promissory note had not been guaranteed (endorsed) by Albert Şerban.

• From profits in the millions to losses, negative equity and close to zero fixed assets

Alser Forest SA, a company that sells machinery for the forestry industry, attracted the sum of 1.5 million euros through a placement of non-convertible and unguaranteed bonds made in 2021, the securities being subsequently listed on the Multilateral Trading System of BVB. The bonds, denominated in euros, had an interest rate of 8% per annum and matured in April 2024.

According to the listing document prepared by Intercapital Invest, the company was to use the money raised from investors for business development. Essentially, it was the purchase of merchandise (accessories and machinery) to increase inventory, which was below market demand, thus increasing sales.

For 2021, Alser Forest SA reports a 225% increase in operating income compared to the previous year, mainly due to a 390% increase in machinery sales, and a profit of 2.1 million lei, more than double compared to that of the previous year, of 0.96 million lei, according to the BVB annual report.

"Attracting working capital through the issue of bonds has successfully achieved its objective. The main objective of attracting capital through the issue of bonds was the financing of forestry machinery to boost the sales of these machinery to specialized companies," the document states.

In 2022, the company's results are largely in line with those of the previous year, but in the report for the first semester of 2023, Alser Forest SA announces the emergence of a crisis in the forestry sector in our country with a major impact on the company's results. For the entire year, Alser Forest SA reports total revenues down 7%, expenses up 22% and a loss of 7.5 million lei.

"The year began with a major crisis in the Romanian forestry sector, determined by the low demand for timber and wooden semi-finished products for construction, which caused companies in the sector to reduce their production activity by over 50%. Also, the profitability in the forestry sector decreased due to the decrease in the sale price of wood material and products made from it", stated in the letter of the CEO Albert Şerban.

According to the report, the loss arose mainly from increased expenses due to inflation and increased prices for all services and products purchased by the company. The profit margin on machinery sales has also fallen significantly due to the crisis and competition, with Alser Forest being forced to sell at lower margins, including to repay some bad loans.

The massive decrease in total assets by 64% stands out, up to 9.6 million lei, the fixed ones being almost zero. Total debts were around 17.9 million lei, so that Alser Forest ends up with negative equity of 8.3 million lei.

In April, Alser Forest announces that, due to the crisis in the forest sector, the company is about to start insolvency proceedings and will not be able to pay the last bond coupon or repay the money to investors. In a short time, the Braşov Court declared Alser Forest insolvent.

• Last year, three companies were established with their registered office at the same address as Alser Forest SA, whose address was changed

Cătălin Chiciu, holder of bonds of the forestry equipment trader, who is part of a group of investors in Alser securities who have already filed a criminal complaint with the Prosecutor's Office attached to the Braşov District Court, claims that the damage to the investors was knowingly done by to the head of the company.

"Albert Şerban, the general manager and chairman of the Board of Directors of Alser Forest SA was not honest, with the aim of deceiving the Alser bondholders. Although he knew that the company did not have the necessary funds to pay the coupon and repay the bonds (we are talking about 1.5 million euros plus 120,000 euros - the principal amount), Albert Şerban did not announce this until very shortly before the maturity date", we - said Cătălin Chiciu.

According to the investor, the mechanism by which Alser Forest SA became insolvent was as follows: Albert Şerban, together with Dennis Constantin Şerban and Irina Şerban established LLC type companies and used the infrastructure and money obtained from the bonds issued in 2021 for the development of the business, and then they moved the activity of Alser Forest SA to the newly established companies, namely Alser Power SRL, Alser Force SRL and Alser Productie SRL. The obvious purpose was the bankruptcy of Alser Forest SA and non-payment of debts to bondholders listed on the BVB.

According to data from the Trade Register, Alser Power SRL was established in February 2023 and is owned by Dennis Constantin Şerban, who also owns Alser Productie SRL, a company established in November 2023. Alser Force SRL was established in March 2023, being owned by Florin Codruţ Ungureanu. The registered office of the three companies is in Săcele, Tărlungeni road, no. 32, which is exactly the address of the headquarters of Alser Forest SA until a few months ago, but which has recently been changed, currently being Braşov, bd. Alexandru Vlahuţă, according to BVB reports.

• Cătălin Chiciu, investor: "The contact details of Alser Forest SA have been deleted and replaced with those of Alser Power SRL or Alser Capital SRL"

Cătălin Chiciu claims that, on websites through which the company presented and sold its products, the contact details of Alser Forest SA were changed with the contact details of Alser Power SRL and Alser Capital SRL, but the contact persons actually remained employees of Alser Forest SA.

According to captures from April 29 that the investor presented to us, on the website https://sculetari.ro, in addition to the name Alser Forest SA, Alser Power SRL appeared in the contact details.

Now, the company Alser Forest SA is again displayed in the contact data on the website, with the new address in Braşov.

"In the case of the websites https://www.cabluforestier.ro/, https://www.echipamentedepadure.ro/ and others, the contact details of the company Alser Forest SA have been deleted and replaced with those of Alser Power SRL or Alser Capital SRL", claims Cătălin Chiciu.

• "In December 2023, Albert Şerban sold 14 cars, billboards, computers, furniture, even the thermal power plant of Alser Forest", says the investor

Alser Forest SA had a loss in 2023, while the new SRLs achieved consistent profits, the investor points out. "The "tick" companies have prospered", says Cătălin Chiciu.

Thus, in just two months of activity, Alser Productie SRL had a profit of 2.26 million lei, and Alser Force SRL a profit of 2.22 million lei in nine months of activity. Also, Alser Capital SRL had a strong increase in profits, to 2.48 million lei, as did Anapurna SRL, 2.03 million lei, compared to modest results in previous years, the investor says.

BURSA newspaper checked the financial data presented by Cătălin Chiciu and they are in line with those displayed on websites specialized in information about companies, such as termene.ro.

"According to my information, in December 2023, Albert Şerban sold 14 cars, billboards, computers, furniture, even the thermal plant of Alser Forest SA. Quite simply, Albert Şerban left society "bare". Under these conditions, I don't think any recovery plan can be realized, because the company has nothing left to do! And Albert Şerban had to notify the investors as early as December that the company has financial problems", says Cătălin Chiciu.

• According to the listing memorandum, Alser Forest was not supposed to pay dividends during the life of the bonds, but distributed more than two million lei, according to BVB reports

In the memorandum drawn up for the listing of the bonds by Intercapital Invest as an Authorized Consultant, signed by Albert Şerban, it was written that, during the duration of the bond loan, Alser Forest will not grant dividends, the investor also says, adding: "But, according to the BVB reports, the company distributed dividends in 2022 and 2023", says Cătălin Chiciu.

According to the last annual report of Alser Forest, in 2022 the company allocated dividends of 1.91 million lei, and in 2023 of 0.17 million lei, money from retained earnings.

The investor adds: "The paragraph related to guaranteeing the bonds through an endorsed promissory note was also violated. The Authorized Consultant had to keep the endorsed note in custody for the entire duration of the bond loan, i.e. from April 23, 2021 to April 30, 2024. The memorandum states that the value of the promissory note covers the total nominal value (principal) of the bonds issued in the basis of the document. The respective payment instrument is in the custody of the Intercapital Invest Consultant for the entire period of the compulsory loan".

But according to the investor's information, that promissory note was not endorsed by the majority shareholder of Alser Forest. "Under these conditions, I suspect that the purpose of this bond issue was, from the very beginning, to harm the bondholders," says Cătălin Chiciu, adding: "I wonder why this aspect (no. note endorsement) was not checked at the time of taking over in custody of the promissory note by the Authorized Consultant. If this aspect was strictly verified, we had a guarantee in the patrimony of the majority shareholder, Mr. Albert Şerban, and the current situation was much different...".

The investor concluded: "From my point of view, there are obvious suspicions that Albert Şerban, taking advantage of the fact that the ticket was not endorsed, harmed Alser Forest SA in order to avoid paying the bonds".

BURSA newspaper tried to get in touch with Albert Şerban, but the director and majority shareholder of Alser Forest did not respond to our request. I have also sent a promissory note request to Intercapital Invest, but have not received a response so far.

Instead, the Financial Supervisory Authority has informed us that it has started an analysis of the situation at Alser Forest, in order to identify possible measures that can be adopted by referring to the authority's specific attributions. In this regard, ASF requested a series of information and clarifications from the representatives of the company and the Authorized Consultant.

"Also, ASF brought to the attention of the judicial administrator and the syndic judge the existing situation regarding the non-observed obligations in relation to the issue of bonds in question", the Authority also mentions in the answer it sent us.

According to the information available on the court portal, the deadline for submitting claims in the Alser Forest case was June 9. The deadline for publishing the preliminary table of claims is June 29, and the final table of claims will be published on July 24.

At the end of last year, Alser Forest SA was 80% owned by Albert Şerban, the remaining 20% being owned by Alser Force SRL.