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Ho Hup EGM is on today

KUALA LUMPUR: Ho Hup Construction Company Bhd’s shareholders, including Low Chee & Sons Sdn Bhd, will have the chance to vote at its EGM today (March 17) to decide whether to replace its existing board or not.

The High Court here yesterday (March 16) turned down an application by its major shareholder Extreme System Sdn Bhd for an injunction to block today’s meeting, which was called for replacing Ho Hup’s present board members.

Judicial Commissioner Mah Weng Kwai, however, did not outline his grounds in his oral judgment and proceeded to fix April 6 for case management for Extreme System’s suit against Ho Hup, substantial shareholder Datuk Low Tuck Choy and over 20 other shareholders.

Extreme System filed the suit claiming that the defendants had breached the Malaysian Code On Take-Overs and Mergers (Amendment) 2004 (or takeover code), among other claims.

The Low family’s vehicle Low Chee and Sons, Tuck Choy’s sister Lai Yoong and Tuck Choy’s wife Datin Chan Bee Ling were also named as defendants.

At a separate injunction hearing yesterday, High Court Judge Mohamad Ariff Mohd Yusof varied the earlier injunction obtained by the Registrar of Companies (ROC) that stopped three shareholders, namely Low Chee & Sons, and its shareholders Tuck Choy and Lai Yoong, from voting.

Ariff varied the injunction to only cover 1.28 million shares, or 1.26%, held by Tuck Choy and the 870,600 shares held by Lai Yoong.

Last Friday (March 12), the ROC was granted the injunction to stop Tuck Choy, Lai Yoong, Low Chee and Sons or their agents from voting at the EGM and any other shareholders’ meetings of Ho Hup.

It was probably the first time that the ROC had taken such action. The injunction was given on the ground that Tuck Choy and Lai Yoong did not notify the company within seven days of a change in their shareholding.

The EGM is the focus of the tussle between Ho Hup deputy chairman Datuk Vincent Lye Ek Seang, who controls Extreme System, and Ho Hup’s former managing director Tuck Choy.

Extreme System currently holds a 27.95% stake in Ho Hup compared with 22.66% held by Low Chee & Sons. But it is not clear how much shareholding their respective friendly parties, if any, have in hand.

Judging by the current shareholding structure, both parties have an equal chance to win the battle. As such, minority shareholders’ votes will be critical to the final outcome on whether the existing board, led by Lye, would have to go or stay on.

Tuck Choy, the eldest son of Ho Hup’s founder, had requisitioned the EGM in a bid to replace Ho Hup’s entire board of directors, except for his younger brother, Teik Kein.

Tuck Choy is seeking to replace the company directors in his bid to push for the implementation of an “alternative” restructuring scheme which proposes the issuance of 25.5 million preference shares together with warrants.

His alternative plans are up against the incumbent board’s proposed restructuring-cum-capital reduction exercise, which will significantly dilute his family’s 24.6% shareholdings in Ho Hup.

The board had proposed a regularisation plan, which would see a 60% capital reduction followed by a private placement of 10 million shares and a rights issue of 30 million shares.

This is Tuck Choy’s second attempt to remove the current board of Ho Hup.

The embattled company’s EGM was initially scheduled for Feb 4 but that was scrapped at the eleventh hour after Extreme System obtained an injunction on grounds that the notice given for the resolutions to remove the directors fell one day short of the mandatory 28-day notice period.

This article appeared in
The Edge Financial Daily, March 17, 2010.

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