Bina Puri’s Tong in Ho Hup

KUALA LUMPUR: In yet another twist to the Ho Hup Construction Co Bhd saga, Tan Sri Tong Yoke Kim @ Tong Kiot Seng, who controls 19.27% of Bina Puri Holdings Bhd via a privately held entity, has emerged as a substantial shareholder in Ho Hup with a 7.28% interest.

According to a filing with Bursa Malaysia yesterday (March 23), Tong, 86, acquired 7.42 million shares in Ho Hup in an off-market transaction on March 10, seven days before the company held an EGM which saw the removal of seven directors and the return of effective control to its founding Low family.

Of note is that Tong and his son, Datuk Andrew Tong So Han, own just under 20% of Bina Puri, also a construction company, via their entity Bumimaju Mawar Sdn Bhd, making them the second-largest shareholders.

It remains unclear from whom Tong acquired the shares as the deal was done off market.

Little is also known of Tong, other than his interest in Bumimaju and that he is listed on the Chinese Chamber of Commerce & Industry of Kuala Lumpur and Selangor’s website as among its honorary presidents for 2006-09.

Via Bumimaju, the Tongs had acquired their interest in Bina Puri in September last year, when the company completed a debt-capitalisation exercise in which it issued 20 million new shares to Bumimaju worth RM20 million, after it had given RM20 million in advances to Bina Puri for working capital.

Bina Puri had carried out the exercise to trim its accumulated debt of RM156 million.

Prior to the exercise, Bumimaju did not have any interest in Bina Puri, whose largest shareholder is Jentera Jati Sdn Bhd with also an under-20% stake.

In a related development, Bina Puri’s shares rose to its 52-week high of 98.5 sen yesterday, a day after a news report listing it as among companies which could be on the lookout for jobs in the Middle East.

The emergence of Tong as a substantial shareholder in Ho Hup is bound to raise eyebrows, given that it had just crossed a major hurdle in resolving its boardroom tussle, which began in 2008.

The fight for control began after Datuk Low Tuck Choy, the son of Ho Hup founder, the late Low Chee, was ousted following the emergence of deputy chairman Datuk Vincent Lye Ek Seang as a substantial shareholder in 2007.

The Low family owns around 27.23% of Ho Hup while Lye, via Extreme System Sdn Bhd, owns 27.95%.

In the long-drawn-out affair which included disputes over land deals and restructuring plans presented by both Low and Lye to help the beleaguered construction outfit get back on track, an EGM was finally held last week, removing all directors linked with Lye and replacing them with parties friendly to Low.

The new board is now evaluating both regularisation plans submitted by Low and Lye, with a new plan expected to be submitted next week.

Low’s plan involves a renounceable one-for-four rights issue of 25.5 million irredeemable convertible preference shares (ICPS) in Ho Hup, with two free warrants for each ICPS subscribed, under an exercise expected to raise an initial RM25.5 million.

He also proposed the disposal of non-core land to raise more capital and to enter into joint development deals with other parties. Lye had originally put forth a 95% capital reduction plan and a sizeable new share placement, which would have brought in fresh cash and new controlling shareholders, but this was then scaled down to a 60% capital reduction and a smaller share placement.

The board headed by Lye had made an announcement to Bursa Malaysia just hours before the EGM that Ho Hup’s unit Bukit Jalil Development Sdn Bhd (BJD) had formed a JV development agreement with Malton Bhd’s subsidiary Pioneer Haven Sdn Bhd to develop a parcel of land owned by BJD, entitling BJD to at least RM265 million, while Pioneer Haven would be solely responsible for meeting and defraying the development costs.

Even as analysts cautioned the drama at Ho Hup had yet to come to a close, with further developments including legal actions not to be ruled out, it was reported yesterday that the company’s advisers, AmInvestment Bank Bhd and Newfields Advisors Sdn Bhd, had resigned, presenting another hurdle to its restructuring plans.

This article appeared in The Edge Financial Daily, March 24, 2010.

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