China Construction Bank had an eye on EONCap

China CONSTRUCTION [] Bank (CCB) had sent its team to do due diligence on EON CAPITAL BHD [] (EONCap) in 2008 with a view to purchase a stake in the banking outfit, while Primus (M) Sdn Bhd had stood to make US$40 million (RM144.6 million) had it sold its stakes to CCB, revealed EONCap’s substantial shareholder Rin Kei Mei in his third day of testimony on Friday, Oct 22.

Rin made the revelation when his lawyer Saheran Suhendran Abdullah asked him to explain what he (Rin) meant by ‘after he failed 655’ and what is the “655”.

Rin told the court that in the first meeting between EONCap and Primus’s director Ng Wing Fai, the latter had told him that Primus had US$1 billion and there is no problem in loaning EONCap the RM655 million to recapitalise the bank. (Primus had agreed to subscribe for a RM655 million bonds in EONCap.)

“All of us were ok and we let him (Ng) to appoint his own directors in EONCap and EON Bank. We were generous and trusted him. I treated him like a son,” said Rin, adding that Ng also visited him when he went through a surgery.

“I told Ng that Bank Negara wanted a Chinese bank and I asked him to find a Chinese bank. He got me China Construction Bank (CCB) and they came over and did due diligence.

“However, CCB’s board could not approve the RM9.55 per share (this was Primus’s entry price in EONCap). Then I said it comes with warrant,” said Rin, adding that he met with Primus and CCB in June 2008 to try work out a deal.

Rin said he told Primus not to miss out the chance to sell to CCB as it would have made US$40 million but Primus decided not to sell out its stakes in EONCap to CCB.

“Then he (Ng) could not come out with the money (RM655 million) and I knew something was wrong. Then I found out that Primus had pledged all its shares in EONCap with Public Bank. If Primus fails to service the loan with Public Bank, Public Bank could end up owning 20% of EONCap,” said Rin.

He said he then asked Kenanga Investment Bank Tengku Zafrul to discuss with HONG LEONG BANK BHD [] since it has offered to buy stakes in EON Bank previously.

‘That is why I have to look for new buyer. If Public Bank had taken action against Ng, we will go down together with Primus,” said Rin.

On whether he knew when Khazanah Nasional Bhd had got permission from Bank Negara to negotiate with HLBB, Rin answered: “After (Dec 17, 2009 when he had received permission to negotiate with HLBB). - by Sharon Tan