Before we invested, we spent many months discussing and negotiating. Once we agreed to invest, we spent a lot of time drafting and negotiating the agreement. A lot of time and effort went into the process. When problems started so soon after we invested, it surprised us. Nurgazy disregarded the agreement even though we spent so much time on it. It had no value to him. It seems entering into an agreement made no difference to him. And the Kyrgyz laws did not seem to matter to him also.

Couple of months after we invested, Nurgazy told us that he preferred to work alone and also did not like the idea of sharing 45% of profits. He never shared 45% of dividends with us anyway. I told him that if that is what he wanted, one solution was to buy our shares. So Nurgazy offered us three options:

1. Convert Investment to a Loan

Nurgazy offered to convert our investment (shares) into a loan with interest rate of 25%. In other words, we will no longer be shareholders and our investment would be a loan. Nothing would be in writing and he would offer no security. He said he will pay back the loan within one years time.

We could not accept this option. Because nothing would be in writing, it would mean we would rely on Nurgazy’s honesty. We already had a written agreement which Nurgazy disregarded. Would he honor an informal unwritten agreement?

As mentioned in an earlier article, when we invested we also paid for land which was supposed to be purchased and owned by OcOO Trilight. Nurgazy said the cost of the land would be reduced from the investment amount. Even though we paid 45% of the land cost and he paid the remaining 55%, he would deduct 100% of the amount when converting our investment into a loan. So we would be taking all the risk if we did not receive the land.

2. Give him 20% of our shares

Nurgazy asked us to reduce our shareholding from 45% to 25% without any payment. In other words, we would give 20% of our shares to Nurgazy, for free. Couple of months earlier, we bought the shares, and now he wanted us to give it to him for free.

Nurgazy provided different reasons for this. He said he was expecting a loan from us which we did not provide, therefore we should give him 20% of our shares. We never made any promises regarding a loan and this is not included in the agreement either. Nurgazy also said he was working full time in the business and does not want to give away 45% of profits. We negotiated and agreed on a price for buying 45% of the business, whether or not Nurgazy was working for the business. His last reason was that a Christian organisation told him that they will give him a loan if he owns at least 75% of OcOO Trilight. I asked him for written confirmation or contact details of this Christian organization but I did not receive anything.

In one of his emails he offered us 25% shares. When he wrote that, it indicated that in his mind he already owned 100% and now offered us 25% of his shares.

3. Find a loan

Nurgazy said we can continue as shareholders if we can guarantee to find him a loan. This is not written in the agreement that we signed. I told him many times that we don’t provide loans. Our goal of investing in Trilight was to help it to grow and prepare it to attract foreign investors and partners. This would mean providing them with financial and other information about Trilight. We planned to apply for loans and other sources of funding if everything was working well. It is already challenging to attract EU investors to Kyrgyzstan. This would be nearly impossible to do when things were not going well regarding our investment in Trilight.

 

We could not accept any of Nurgazy’s three options. To retain our 45%, we would need to give more money, which we would not do. Alternatively we would have to give some of our shares to him for free, or convert everything into an unsecured loan without any paperwork. He told us if we did not provide a loan or give him 20% of our shares for free, we will lose everything. This is like negotiating with someone who is holding a gun to your head.

I suggested that Nurgazy arrange financing to buy our shares. He could find investor(s) to buy our shares. He said some local investors are interested but they do not have the money! Other options were to take credit from a bank or other sources, or sell his personal assets. But he was unwilling to do that.

We then suggested the option to have an agreement with us where he could buy our shares in future (for example after 6 months or 1 year) at a pre-determined price. This will give him time to raise capital. He did not accept our suggestion.

Since we were not making any progress with convincing Nurgazy to follow the agreement, or with selling our shares, we decided to make an offer to buy Nurgazy’s shares. In theory this would solve all the problems. In practice it did not. More details in the next article.

 

Note: A criminal case is currently open. These are two most recent letters I received from the prosecutor.

уведомление

Opening of Criminal Case March 2018

 

Next article: Our Offer to Buyout Nurgazy

 

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