ICash sunk in horror story, Korean style

South Korean pop artist Psy released his hit Gangnam Style last July. The song shot to No.1 on the Korean charts and instantly went viral.

Loved for its catchy tune and its unique dance moves, it became the first YouTube video to reach 1 billion views in December.

As the remarkable success of Gangnam Style was unfolding, Julia King and Chris Charlton were having a remarkable Korean experience of their own. They were hoping for a worldwide hit but they got a Korean horror story instead.

In August, King and Charlton had just gone on the board of ATM company iCash to oversee its exciting expansion in South Korea.

ICash had sold its fleet of Australian ATMs for $16 million, a business that delivered profits, and bought into NeoICP, a Seoul company with a promising non-bank cash payments system.

For King, a professional director and former chief executive of Louis Vuitton, and fellow director and accountant Charlton, NeoICP has proved to be the corporate hospital pass of the year.

Not only did iCash buy a lemon but they paid scrip for that lemon and, using its scrip, that lemon is now bidding to wrest control of iCash via a reverse takeover. The battle for board ascendancy will be put to a shareholder vote on July 22.

Worse, while iCash is bleeding cash and the vulture funds hungrily circle, King has fielded another requisition for board changes. This time, embedded among the Korean names on the ASX release was one Garry Bonaccorso.

Keen observers of Vanuatu tax structures may recall Bonaccorso, along with elusive businessman Phillip Grimaldi of Murchison Metals fame, were pursued by the Australian Federal Police. Their alleged tax scam was a "round robin" structure involving PKF Vanuatu, dozens of New Zealand bank accounts and accused money launderer Robert Agius.

Bonaccorso and his Korean associates are trying to have two directors, Daniel Altiok-Brown and Barry Sechos, removed from the board. But Sechos and Altiok-Brown - representing the hedge funds, Brian Sherman's Sherman Group and Octavium Capital - have only just turned up on the scene themselves.

Octavium invests in "unloved and underappreciated companies", of which iCash is clearly one. Since switching strategies and inviting the Koreans on board, iCash has gone from a net profit of $3 million and a share price of 45¢ to a loss of $12.7 million and a share price of 7¢.

Describing the One Company Transaction (the merger) as "shareholdercide", Octavium wrote to iCash in February urging it to abandon the plan.

NeoICP and its associates, Octavium wrote, would control 40 per cent of the stock, enough for control (iCash has 63 per cent of NeoICP). Already, iCash revenues had plunged 45 per cent and profit from the Korean NeoICP operation was down 189 per cent.

So, King and Charlton relented, gave the hedge funds two board seats for their 8.8 per cent of the stock and delayed the One Company Transaction.

It has been quite a year. ICash sold its 1000 ATMs last January to concentrate on Korea. In May 2012, the Koreans requisitioned the company for board representation. NeoICP's "Steave" Ham became iCash executive director.

NeoICP's revenue projections turned out to be "wildly optimistic", the iCash board told shareholders earlier this month. The statement also revealed that iCash's former chief executive, James Manny, had been on a $500,000 cash success fee for the One Company Transaction.

Under Korean law, if iCash could acquire 95 per cent of NeoICP it could move to compulsory acquisition.

According to iCash, Manny procured an "offer to issue 9.99 per cent of iCash's scrip to 14 "unassociated and unrelated" NeoICP shareholders (in advance of the shareholder meeting to approve the OCT) in return for their collective 9.6 per cent interest in NeoICP.

Alas, said iCash, "it has since emerged that many of the parties receiving iCash scrip had strong connections to NeoICP".

Amid the countdown to the shareholder meeting next month, the Koreans are up to 40 per cent and on the warpath to take control. Meanwhile, the company strategy is on hold and cash reserves are dwindling.