03/08/2011 (The Star) - A day after announcing its bold plans of building 616 bio-refinery plants in Malaysia and Indonesia, little-known Lestari Pasifik Bhd has quickly got into the limelight again, but this time for the wrong reason. The company has been put on the “alert list” of the capital market regulator, the Securities Commission (SC).

According to the SC's website, the reason for Lestari being placed on the alert list was because it had not registered its prospectus with the regulator. SC uses the alert list to caution the public of investing in companies not registered with them.

At press time, the SC had yet to reply to additional questions concerning Lestari's predicament.

However, the matter may not be as insidious as it seems. According to Lestari chief executive Datuk Dr Clement Tan, what had transpired was that a copy of Lestari's draft prospectus had reached officials at the SC. The copy of the prospectus was unsigned and incomplete, which then led the regulator to quickly issue an alert in order to prevent any unsuspecting member of the public from investing in Lestari based on the incomplete prospectus.

While Lestari had declared its intention to go public by the first quarter of next year, it is still in its early stage of preparing its paper work, Tan said.

Tan also said there had been a “possible leak of the prospectus” from his company, which had led to the prospectus reaching the SC. “The prospectus is not supposed to be issued yet as we are still drafting it.”

He added: “There are many blanks to be filled on the technical aspects of our operations and we still need to form contracts with Felda, the Indonesian governmental agencies and our China takers before we hand the draft prospectus over to our merchant bank, CIMB,” he said.

Significantly, Tan said Lestari had no intention yet of issuing any securities in its company until all these matters were sorted.

He said Lestari would issue a press statement later this week to clarify the matter and inform the public that the company had not made any offering of its shares yet and would not be doing so any time soon.

On Monday, Tan had said that Lestari's listing plans by early next year was to raise RM2.7bil for its operations.

Lestari's ambitious plans which include building more than 600 refineries in Malaysia and Indonesia with hopes of garnering a 45% market share have surprised industry players. “What is the track record of this group?” questioned a palm oil refinery expert.

The plants, known as module plants, will be less than an acre in size and are estimated to cost RM3.5mil each. Tan said the rationale for building so many plants was to lower costs in transporting oil palm empty fruit bunches from mills to the plants for processing.

Still, not much information is available on the Arter Group of Russia, Lestari's joint-venture partner. Tan said the Russian group was the Russian government's representative that worked with other countries in developing green technology. It has patented the technology used for the production of bioethanol called the mechano-enzymatic technology system, which is used by Lestari for its operations.

Since 2006, SIRIM Bhd and the Russian Academy of Science have been researching on how to efficiently produce bioethanol from oil palm empty fruit bunches using this technology. Lestari is the company assigned to commercialise the research venture.

There are four Russian nationals on the board of Lestari, two of whom are from the Arter Group, while the other two are professionals from the Russian academia.

According to Lestari's website, Tan was made CEO of Lestari last July and holds a PhD in strategy management. The website says he has more than 16 years of experience in “corporate capitalisation”, private equity, fund raising and IPO exercises, most recently as the executive chairman of the 5G Media Group.