Hong Kong-based Primus Pacific Partners yesterday filed a lawsuit against the directors of EON Capital Bhd (EONCap) (5266) in an attempt to stop the lender from being taken over by bigger rival Hong Leong Bank Bhd.
Primus, which is EONCap's single largest shareholder with a 20.2 per cent stake, claims that Hong Leong's RM5.06 billion takeover offer is unlawful in the way it is structured and that EONCap's directors, who plan to let shareholders decide on the offer, have not acted in the best interest of the company.
"We have secured a number of legal opinions that come to the conclusion that the manner in which the offer is proposed to be implemented is unlawful," Primus' managing director Jeroen Nieuwkoop said in a press statement yesterday.
Primus' latest move, which was not unexpected, came just a day before EONCap was to have announced that shareholders would meet on July 15 to decide on Hong Leong's offer, sources said.
It is understood that the announcement for the extraordinary general meeting has been shelved for now as the bank deals with the lawsuit.
EONCap told the stock exchange late yesterday that it was seeking legal advice over the suit.
Adding heat to the smaller bank is that Hong Leong has now said that it may withdraw its takeover offer if EONCap doesn't secure all approvals for the offer - including that of shareholders and Bank Negara Malaysia - by August 15 this year. It said this in a separate filing to the stock exchange yesterday.
It is understood that Primus has named all the bank's board of directors - except Primus' representative Ng Wing Fai - as respondents in the lawsuit. There were nine in all.
In addition, three corporate entities controlled by the families of major shareholders Rin Kei Mei and Tiong Hiew King were also named.
The Malaysian High Court has set a July 6 hearing date. A source close to Primus said the firm is not seeking an injunction to stop shareholders from meeting to decide on the offer, as this would be a temporary remedy.
What it wants is for the court to agree that Hong Leong's offer, as it is currently structured, is unlawful and shouldn't be allowed. In the event that it happens, "everybody has to go back to the drawing board", the source said.
"Given the urgency of the matter and importance of a swift and final resolution, a certificate of urgency will be filed for the subject matter to be resolved with finality," Primus said in its statement.
Hong Leong first attempted to buy EONCap in January, offering RM4.92 billion to take over the latter's assets and liabilities, but the board had shot down the offer as it was seen as too low.
Hong Leong then launched the improved RM5.06 billion offer after the smaller bank appointed new board members. The new board plans to recommend that shareholders accept the improved offer.
Primus is against the takeover as the offer price of RM7.30 a share is well below its entry cost of RM9.55 a share. EONCap's independent adviser Credit Suisse has said the offer is unfair from a financial perspective.
By Adeline Paul Raj
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