Pallas Air (formerly Lifa Air)

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Hi Verner,

I want to clarify that the comments I’ve shared on this forum are, of course, related to matters that I believe the company has not handled correctly, neither toward me nor the finance company. In 2021, I raised these issues with management, but instead of changing their methods—as their long-standing way of dealing with customers directly implies committing fraud against the finance company and putting customers in a risky situation—I refused to participate. Now that this practice has come to the attention of the finance company, they have lost the right to continue doing business in this manner. (That possibility never even existed). Attached is the response from the finance company:

“Without going into more detail regarding our current way of operating with Genano, the procedure has changed from before and now maintenance is handled correctly. Therefore, comparing it to your case is unnecessary. The important message, then, is that operations will not continue as they were. Otherwise, I do not wish to comment on our cooperation and its various stages.”

It may well be that this is not the right forum, but if someone wants to put money into this, it might be good for them to at least know what the operations are like, and how business partners and customers are treated?? THIS IS SIMPLY NOT HOW YOU TREAT CUSTOMERS.

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I quickly browsed through the share issue prospectus; here is a small snippet from the risks section. This is how the Chairman of the Board and the CEO (son and father) have “taken care” of ensuring the interests of minority shareholders. If anyone wonders why or who is vacuuming the company’s coffers empty, answers can be sought below. This is what I feared earlier, and it is now confirmed below:

“On May 3, 2023, the Company’s former Chairman of the Board, Eppu Mäkipää, signed, without Board review and approval, a fixed-term consulting agreement on behalf of the Company with Lifa Air Middle East FZCO, a related-party company acquired by Vesa Mäkipää on the same day, which the Company’s Board has deemed invalid. The Company has made payments to Mäkipää based on the consulting agreement totaling approximately 160,000 euros, which the Company is reclaiming from Mäkipää. Vesa Mäkipää, in turn, is demanding approximately 340,000 euros from the Company in connection with his terminated CEO agreement. It cannot be ruled out that disagreements regarding the consulting agreement and the CEO agreement may cause the Company to incur investigation and litigation costs, payment obligations, or other adverse consequences.”

Other observations after reading the prospectus:

  • A lot of the company’s money is tied up in protective masks that haven’t been sold from inventory because customers aren’t buying. The expiration dates on these will eventually run out. There is a rush to sell, or otherwise they will eventually end up in the trash or in a strategic reserve at near-zero prices, waiting for a new corona wave as an emergency backup.

  • Will the company be able to get a competent Board that looks out for the interests of minority shareholders? Anyone considering a board membership will likely look into the company’s past events and conclude that maybe I’ll skip this after all; there are better options available for one’s working time.

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Even Kauppalehti has picked up on this, as you had already noticed earlier. You really have to wonder what these guys were thinking:

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Someone could interpret this as embezzlement.
To my eyes, it looks like scamming the gullible, and all the red flags are waving so hard that the cloth is barely staying on the pole. Are they trying to take even the ashes from the hearth before it goes under?

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Now you’re starting to sound like a broken record, and it’s no longer adding any real value to the discussion. Furthermore, Mäkipää’s actions—which have now progressed to a criminal investigation—relate to the year 2022 and, as I understand it, have no connection whatsoever to Genano. As an aside—I would be surprised if the current criminal investigation remained the only one surrounding Lifa Air.

Your website is also interesting, and at the very least, you are dedicated to your cause. And I say this with all due respect: remember to also enjoy the summer air and turn your thoughts from Genano to other things as well.

I debated between flagging the message above vs. writing this comment. Strictly speaking, the message should probably be flagged for violating the rules, but I felt that a verbal comment might still be useful here.

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Vesa Mäkipää, the founder of Lifa Air Plc, who has built the company’s revenue to over 17 million euros in its best years, is now being targeted by smear campaigns. It is clear that Mikael Rentto is aiming to weaken Mäkipää through these actions to gain full control of the company and to attract new investors to cover losses incurred from Genano’s previous business transactions.

Genano Oy “thanked” my opposition by failing to pay the sales commissions due to me, which exceed 250,000 euros.

As a shareholder, I have requested that…
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FROM WHAT amount is the sales commission 250,000 euros? We are not talking about some insignificant man here who one would expect people to hold on to tooth and nail, whatever the cost.

So, as a SHAREHOLDER in Genano and through that now a shareholder in Pallas Air?

Genano’s result for 2019–2022 has been positive every year. For 2022 only barely, 2023 has not been published yet. Or perhaps it has, for the months preceding the merger, and the information might even be found on this forum.

Rentto saved Lifa Air from immediate bankruptcy with his entry and is now the only one who has guaranteed participation in the share issue with his ownership stake.

Rentto will determine the success of the share issue; the danger is that after the issue, there will be willing sellers at the issue price but no buyers. In that case, the Mäkipääs would have the opportunity to become the company’s primary decision-maker during the issue and afterwards by buying up all the shares trading around the two-cent mark.

The Mäkipääs, as the top owners in October 2023, accepted that in November Rentto had joined and become the largest shareholder. The current situation is that Rentto did not allow the Mäkipääs’ demand to participate in the rights issue by using the conversion of their capital loans into shares as payment, which were agreed to mature in 2026 when Genano and Lifa Air merged.

Pallas Air’s board has processed the matter and assessed, among other things, that at this stage the company primarily needs cash. Additionally, they have obtained a legal opinion from an external expert that supports the board’s decision.

So, do Rentto and the Mäkipääs currently have a disagreement over the matter?

How old is this matter regarding Joakim Riippa’s view on his 250,000 euro commission receivables from Genano?

Much information can be found online about Joakim; I gather he is using his real name. Among other things, he was interested in safety criteria for indoor air purifiers, highlighting the danger of potential ozone leakage.

linkedin: Skilled in Marketing Management, Negotiation, Sales, Entrepreneurship and Sales Operations.

The 250,000 euro receivables he claims will remain unpaid if Pallas becomes insolvent. It seems strange that he is smearing the company.

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Thomas’s comment that, based on preliminary results, 42 percent of the subscription rights were subscribed.

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Here is some fresh reading about Pallas Air. :gem:

42% of the shares offered in Pallas Air’s rights issue were subscribed, which strengthens the company’s balance sheet position and provides much-needed breathing room. In connection with the report, we have updated the impact of the offering in our forecasts, but due to the undersubscribed issue, the company’s balance sheet risk remains present, as a result of which we are revising our target price to EUR 0.02 (prev. EUR 0.03). The stock’s valuation still relies on a rapid earnings turnaround, for which changes in the management team and ownership base, as well as the new strategy, create better conditions than before in our view. We are updating our recommendation to Reduce (prev. Sell).

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https://www.inderes.fi/files/3bb59e47-fd48-4bad-bc0b-8330840314df

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We have updated Pallas Air’s target price to EUR 2.00 (prev. EUR 0.02) :cowboy_hat_face: It’s worth reading Arttu’s comment below:

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Another announcement like this at the usual time, 23:45. :slight_smile:

8 July 2024 23:45:01 EEST | Pallas Air Oyj | Company Release

The Board of Directors of Pallas Air Oyj (“Pallas Air” or the “Company”) has today, 8 July 2024, appointed Tomi Viitanen as the new CEO of Pallas Air. Tomi Viitanen will start in the position of CEO as of 9 July 2024. Viitanen moves to the position from his role as Chief Transformation Officer at Pallas Air.

Tomi Viitanen (eMBA, Aalto University) has previously worked, among other things, in management positions at the ISS Palvelut Group, as CEO of Nanoksi Group and Swissport Finland, and as the head of Swissport’s Northern European operations.

Teppo Sipilä (M.Sc. Econ.), who has served as the Company’s interim CEO since February 2024, will continue in his previous duties as the Company’s CFO. Sipilä has served as the Company’s CFO since October 2022.

Pallas Air Oyj

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Here are Thomas’s comments regarding Pallas Air’s change negotiations, among other things.

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Thomas’s preview comments as Pallas Air releases its H1 report at some point on Thursday.

The report is the first in which the effects of the merger between Lifa Air and Genano are fully reflected in the Group’s figures. We expect the merger to have brought significant growth compared to the comparison period, but the result to have remained loss-making as the synergies to be realized from the merger take time. Our attention will be on management’s comments regarding the progress of the turnaround and the new strategy. In connection with the preview, we have lowered our forecasts for the review period as a result of the challenging business environment.

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It leaves me speechless reading the half-year report, EPS -10.52 euros and the share price being around 1.8 euros:)

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Yeah, there hasn’t been much trading today. I haven’t followed the company much, but I did a quick review inspired by @Juippi2.

The figures are indeed quite grim, but I was mainly interested in liquidity issues, and they look pretty weak. On page 8 of the report, the following immediately caught my attention:

“The company has a 2 million euro overdraft facility maturing in the second half of the year, the restructuring of which the company’s management and board are investigating. If the company fails to restructure its loans, the company’s working capital may not be sufficient for the company’s needs for the next 12 months, and the company’s liquidity risk will not be eliminated. The factors described above indicate such material uncertainty that may cast significant doubt on the company’s and the group’s ability to continue as a going concern. Based on its overall assessment, the company’s management has prepared the 2024 half-year report on a going-concern basis.”

There seems to be 800k EUR in cash and almost 3 million in short-term debt, so they’ll have to pull a rabbit out of a hat if they want to get through this with just their own operations. Granted, there is a lot of inventory (4M), so cash can be freed up from there if the goods sell.

Of course, looking at the income statement and cash flow statement, it seems a lot of money is currently being spent just on running the operations. Well, if you want to say something positive, it’s probably going to be a rather interesting survival struggle towards the end of the year.

Edit. Of course, that overdraft facility could be fully refinanced with a new one, but the negotiations will likely be anything but cheap if they can’t show signs of a healthier business…

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A man familiar from the “Alokas interviews” thread also comments on this company.

https://x.com/InvestmentTraps/status/1836743751017939214

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It clearly states the aim there, without taking any stand on the realism at all.

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Here is the fresh company report on Pallas Air written by Thomas.

Pallas Air’s H1 figures exceeded our expectations in terms of revenue, but profitability fell short of our forecasts due to a heavy cost structure, which strained the balance sheet position. In the coming years, the company will focus on implementing a turnaround, and new financial targets pave the way toward a significantly larger scale. The ambitious medium-term financial targets are subject to the continuation of the turnaround and upcoming financing negotiations, which exposes the share to concrete financing risk.

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Pallas Air had €0.8M in cash at the end of June, negative cash flow, and now a payment demand has been issued for their €2M debt.

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Here are Rauli’s comments on the latest news.

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Here is a fresh company report from Thomas on Pallas Air. :slight_smile:

Due to the subdued demand environment for private and public sector investments and Pallas Air’s quiet news flow, we have lowered our earnings forecasts for the coming years. The company showed signs of a turnaround progressing in its H1’24 report, but with a difficult balance sheet position and an expired credit limit, the stock’s risk/reward ratio remains weak in our eyes at the current share price level. We lower our target price to 0.7 euros (previously 1.5 euros) and reiterate our sell recommendation.

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