KUALA LUMPUR: Ho Hup Construction Bhd shareholders yesterday (March 17) voted out all the directors linked to deputy chairman Datuk Vincent Lye Ek Seang and replaced them with a group that effectively help the founding Low family back in control. But analysts say this may not be the end of the tussle and they expect more manoeuvrings including legal ones in the months ahead.
At the meeting, 55.94% of shareholders voted to remove the seven directors — deputy chairman Lye, managing director Lim Ching Choy, Lai Moo Chan, Long Md Nor Amran Long Ibrahim, Mohd Shahril Hamzah and Foo Ton Hin.
The resolution pertaining to the removal of Datuk Liew Lee Leong was skipped as he had resigned from the board in February.
In their place, six new directors — Tan Sri Kamaruzzaman Shariff, Hew Thin Chay, Yusob Md Tasir, D Felix Dorairaj, Slamat Hamzah and Chow Seck Kai — were voted in. About 55.81% of shareholders voted to pass the resolutions.
According to a representative of Tricor Investor Services, who was an observer at the proceedings, 118 shareholders, proxies and corporate representatives were present.
All the resolutions were passed without any debate by share-holders.
Newly appointed Kamaruzzaman and Hew said the new board would examine both the original and proposed plans to come up with one that was equitable to all shareholders.
“We should be able to submit a new regularisation plan within two weeks,” said Hew, adding that time was imperative for the company. Also they noted that both regularisation plans from Lye and substantial shareholder Datuk Low Tuck Choy would be considered.
Beleaguered Ho Hup has been categorised as a Practice Note 17 (PN17) company. It suffers from accumulated losses of RM122.7 million. It needs fresh capital to revive its financial health.
Interestingly, the previous board announced to Bursa Malaysia mere hours before the EGM that Ho Hup’s unit Bukit Jalil Development Sdn Bhd (BJD) had formed a joint-venture development agreement with Malton Bhd’s subsidiary Pioneer Haven Sdn Bhd to develop a parcel of land owned by BJD.
The joint venture will entitle BJD a minimum of RM265 million and Pioneer Haven will be solely responsible to meet and defray the development costs.
The ousted board initially proposed a restructuring scheme that involved 95% capital reduction and a sizeable new share placement that would bring in fresh cash as well as new controlling shareholders. The scheme was then revised to 60% capital reduction and smaller share placement.
Datuk Low Tuck Choy, who requisitioned for the EGM, opposed the previous board’s proposal.
Low has proposed 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.
The exercise is expected to raise an initial RM25.5 million from the ICPS. Low has also proposed the disposal of non-core land to raise more capital, and to enter into joint-venture development deals with other parties.
Speaking to the media after the EGM, Low said shareholders could now expect “a less painful restructuring scheme” adding that his present role in Ho Hup had ended.
“I have played my part and taken the initiative to make sure that the minority shareholders are not short-changed, so now I leave it to the new board and the independent directors to look after the best interests of the company,” he told the media after the meeting.
Low is one of the three owners of Low Chee & Sons Sdn Bhd (LCS), the second-largest shareholder in Ho Hup holding 22.66% equity stake, after Lye, who controls 27.95% shareholding.
The removal of the seven directors is seen as a move made by Low to push through his alternative restructuring scheme for Ho Hup.
Yesterday’s EGM was the second attempt by Low to remove the board as the first meeting, which was scheduled last month, was blocked by a High Court injunction granted to Extreme System Sdn Bhd, controlled by Lye.
The row between Low and Lye started since the latter bought into the construction outfit in 2008.
Has the shareholder fight ended following the removal of the board led by Lye? It is probably too early to draw the conclusion considering Lye is the largest shareholder. His votes carry weight on all the proposals made by the new board in the future.
Also, Extreme System has filed a suit against Ho Hup, Low and over 20 other shareholders claiming that the defendants had breached the Malaysian Code On Take-Overs and Mergers (Amendment) 2004, among other claims.
Some minority shareholders appeared ambivalent on the issues at hand and were more concerned about whether food would be served fast enough and whether or not they could get free parking.
Food was eventually served, though free parking was denied, but if the company, whoever is in charge, fails to get its act together and set into motion a viable revival plan, shareholders may not even get the crumbs.
This article appeared in The Edge Financial Daily, March 18, 2010.
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