Ho Hup Construction Company Bhd shareholders yesterday blocked the proposed sale of a parcel of land by its subsidiary Bukit Jalil Development Sdn Bhd to Action Master Sdn Bhd.
“This was proposed by the last board. We have performed our fiduciary duty and put it forward to the shareholders. The majority of the shareholders did not vote for the resolution,” Ho Hup’s chairman, Tan Sri Kamaruzzaman Shariff, told reporters after the company’s AGM and EGM yesterday.
The disposal was first proposed on Dec 16, 2009, during the tenure of the previous board that was headed by Datuk Vincent Lye.
The sale price of RM7.6 million included a 10% premium on the valuation report’s market price as prepared by Henry Butcher Malaysia Sdn Bhd. The funds were to be used for working capital and to repay the borrowings of the group.
Ho Hup is a Practice Note 17 (PN17) company, and its majority shareholders are Extreme System Sdn Bhd, which holds a 27.95% stake, and Low Chee & Sons Sdn Bhd, which has 22.66%.
Extreme System is the investment vehicle of Lye, the former deputy chairman who was removed from the previous board on March 17 in a boardroom tussle with the founding Low family.
Datuk Low Tuck Choy, son of Ho Hup’s founder, is one of the three owners of Low Chee & Sons and was ousted following the emergence of Lye as a substantial shareholder in 2007. Low’s brother, Low Teik Kein, remains in Ho Hup as a non-independent non-executive director.
According to an observer of the proceedings, both the representatives of Extreme System and Low Chee & Sons were present at the AGM.
The majority of the shareholders also did not approve the previous year’s payment of non-executive director’s fees of RM133,000.
To a large extent, the future of Ho Hup hinges upon a prized 60-acre parcel of land in Bukit Jalil, which was signed to a joint venture with Malton Bhd at the eleventh hour before the ousting of the old board in March this year.
In a bid to reclaim the land, Ho Hup has since filed a suit against the company’s former directors, its unit Bukit Jalil Development and Malton’s subsidiary Pioneer Haven Sdn Bhd relating to their joint development agreement (JDA).
On July 7, the court will decide on the applications made by certain defendants.
Under the JDA signed by the old board, Ho Hup would tap Malton’s financial resources and goodwill, and receive RM265 million (market value of the land) over several years.
The counter-argument is that if Ho Hup were to sell the land, instead of jointly developing it, the company could get the cash upfront.
Kamaruzzaman is spearheading the company’s regularisation as part of the executive committee. “There are various handicaps, but we are confident that we will pull through. We are still looking at construction projects within our financial range even though we are limited by the PN17,” added Kamaruzzaman.
Ho Hup closed at 45 sen yesterday, down 1.5 sen.
This article appeared in The Edge Financial Daily, June 29, 2010.
No comments:
Post a Comment