IT happens all the time. The rigorous and abundant news flow on corporate tussles usually grind to a deafening halt when it reaches the court’s doorstep.
Overnight, months of brouhaha, public bashing, second guessing and tit-for-tat suddenly turn into subtle and quiet manoeuvres, all in the name of avoiding potential legal land mines.
We’ve seen that happen in the battle for control of ailing Ho Hup Construction Co Bhd and the fiery shareholder feud involving Petra Perdana Bhd.
Truth is, nail biting legal tussles – or not – businesses need to go on.
And that is probably the very signal the board of EON Capital Bhd (EON Cap) was trying to flash out over the week when it issued a note to Bursa Malaysia saying that it has “affirmed its decision to table the offer to the company’s shareholders at a general meeting for their consideration and approval and to empower the board to make the decision whether or not to accept the offer” subject to several conditions, one of which includes the final court’s decision on the petition filed by Primus (Malaysia) Sdn Bhd against the company and several directors.
(Primus filed a suit against EON Cap’s directors last month for breach of fiduciary and statutory duties by failing to understand the impact of the Hong Leong Bank Bhd’s (HLB) offer on the company, failing to assess the fairness of the offer and commitment to a sale at under value seeking RM1.12bil in damages).
The timing could have been deliberate – EON Cap was not too far away from issuing a notice for an EGM for shareholders to vote on the proposed buyout by HLB when the petition was filed.
So far, so good – for Primus, that is.
The petition has thrown a spanner in the works, derailing the deal – but as it turns out, maybe not for too long as far as processes go.
EON Cap has shot back that it’s going through with the motions for the deal subject to the outcome of the court case.
In other words, if the court rules in its favour, the stage is set for the deal to take off and no (more) time is wasted.
On the other hand, if the court rules in favour of Primus, it’s a no deal.
For each side, no doubt, the stakes are huge.
But here’s the red flag – no deal could actually mean a big deal as things go back to status quo at EON Cap.
After months of brawling and having sparked off a torrent of recrimination among the feuding major shareholders and board, that’s hardly an ideal and conducive setting to chart a company’s future. In fact, that is the root of the feud in the first place. Are we likely to see a rerun of that battle?
Meanwhile, another big question looms – can HLB’s deadline of Aug 15 for the deal to get the necessary approvals (from shareholders and regulators) be met? Chances are highly unlikely as the EGM has been delayed while the final outcome of the deal is subject to the court’s decision.
Next question – will HLB wait any longer than it already has or will it walk away? Remember, it’s patience could have thinned out as it had earlier waited out a massive board reconstruction of EON Cap.
What if between now and end-September (the hearing dates), other opportunities beckon? What if the economic dynamics in the country suddenly shifts on the back of a worsening external scenario, rendering the deal no longer strategic?
Perhaps, it’s time all the parties involved re-assess what’s their end game in this protracted tussle. They might be surprised by what they discover. You think?
● For what had started out like a two-horse race, business editor Anita Gabriel thinks the EON Cap tussle is getting pretty crowded.
SIDEWAYS
By ANITA GABRIEL
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