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JSM CEO launches offensive

Jones labels criticism ‘ridiculous’ coming from hedge fund that ‘lost $3 billion’.

EMBATTLED JSM Indochina CEO Craig Jones on Wednesday called criticism by an activist investor “ridiculous” and said he would defeat a motion to oust him when the two go head-to-head in an investor meeting expected next month.

Passport Capital LLC, a San Francisco-based hedge fund that owns 13 percent of JSM Indochina, called on October 16 for an investor meeting to replace Jones, Chief Financial Officer Rowell Tan and Chairman Michael Tanner over concerns that the developer was slow to invest the US$220 million it raised in a July 2007 listing on the London Stock Exchange’s growth board.

Speaking to the Post from Europe, where he is attempting to enlist support from shareholders in the Alternate Investment Market-listed firm, Jones said Passport was out of touch with the real estate markets in Vietnam and Cambodia.

“Passport have basically said we wish you would have bought high, bought at the top of the market. You should have signed construction contracts one-and-a-half years ago when construction costs were sky-high,” he said. “That idea is ridiculous.”

Jones, who owns 14.5 percent of JSM, said conditions were not right to push ahead with developments or buy more land following the listing as land prices and construction costs both soared in 2007 and 2008.

Before the global economic downturn in late 2008, Jones also said it was almost impossible to find affordable construction contractors as demand was intense in the middle of a regional building boom. Between 2006 and 2008, construction prices doubled, he said.

“Prices were outrageous. Now, construction prices have dropped 25 percent, even more,” he said, adding that JSM was close to finalising a contract with a construction company to push ahead with its Embassy Centre mixed-use property development in Phnom Penh.

Jones said the development, which was a cornerstone of its AIM listing, will “absolutely change the face of retail in Phnom Penh”.

Passport had also failed to appreciate the work JSM was doing in securing distressed assets, including the $65 million purchase of two residential towers in Thao Dien, District 2, Ho Chi Minh City, he said. The purchase, which Jones said he had been negotiating since he first noticed the company was in trouble in 2008, was announced Wednesday in an exchange filing.

More investments soon
He added that the company was planning to announce several more investments over the coming months, saying the company was progressing “through to the final stages of negotiation with sellers and potential partners”.

He refused to comment on whether the company was in talks with South Korea’s GS Engineering and Construction to buy the site of the planned International Financial Centre mixed-use complex on Phnom Penh’s Sothearos Boulevard, saying only that “we are very interested in all areas of Phnom Penh real estate”. GS Engineering has repeatedly refused to comment on the issue.

Jones also contrasted Passport’s financial performance with JSM’s over the period since the listing. “These are guys who lost around $3 billion of their customers’ money,” he said.

Passport said in June 2008 it had assets of about $4.5 billion. It now oversees $2 billion, according to its Web site.

Jones said his family had snapped up a land bank of prime Indochina real estate in 2003 that was valued at $27 million when he placed it in the company at cost price in 2007.

The properties, which include the Embassy Centre site, land in front of Wat Ounalom on the Phnom Penh riverfront, Colonial Mansion serviced apartments and a block of land on which the company is building Colonial Mansion 2, were now worth $63 million, he said.

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