EON CAPITAL BHD [] director Datuk Seri Tiong Ik King testified the "major reason" prompting his family to want to sell their stake in EON Capital Bhd (EON Cap) was their "concerns" about the conduct of EONCap's major shareholder, Primus Pacific Partners Ltd.
Tiong was testifying on Friday, Oct 1 as a witness in an ongoing hearing of the suit brought by Primus Pacific's Malaysian unit, Primus (M) Sdn Bhd. Primus holds 20.2% of EONCap
Primus had sued certain EONCap shareholders and directors for some RM1.12 billion in damages should HONG LEONG BANK BHD [] (HLBB) succeed in purchasing EONCap's assets and liabilities for RM5.06 billion cash.
Questioned by one of the respondent's counsel S. Suhendran, Tiong said his family's decision to exit EONCap "has a lot to do with Primus".
"I view Primus as a dangerous investor and banker because they have a reckless attitude towards Bafia (Banking and Financial Institutions Act 1987), disregard of banking regulations in Malaysia," Tiong told the court.
Tiong said that he had raised his concerns during board meetings "at some point". However, he could not remember when.
It was revealed that the Tiong family had invested about RM254 million for their 16.6% equity stake or 112.72 million shares in EONCap in the early 1990s.
This translates to a cost per share of about RM2.25 a piece while HLBB's RM5.06 billion revised cash offer works out to RM7.55 per EONCap share.
During cross-examination by another respondent's counsel Tan Sri Cecil Abraham, Tiong said EONCap's previous board had consider the views of international financial advisers Goldman Sachs, in relation before the board's majority had rejected HLBB's initial offer of RM4.92 billion on Feb 2.
On Monday, Sept 27 EONCap's shareholders at an extraordinary general meeting voted in favour of selling EONCap's banking assets and liabilities to HLBB for RM5.06 billion, subject to the final decision of the court in the ongoing case.
Tiong added that before deciding to table HLBB's offer to shareholders, EONCap's new board had considered updated advice of its advisers including Goldman Sachs, Credit Suisse, Messrs Adnan Sundra & Low and Pricewaterhouse Coopers.
Earlier, when Primus' leading counsel Datuk Loh Siew Cheang resumed questioning, Tiong disagreed that he had "completely" focused on exiting EONCap but said he devoted "only part of [his] thinking" on how to monetise his family's stake in the company.
Tiong also disagreed with Loh's suggestion that HLBB's offer was "an extraordinary opportunity", preferring to describe it merely as an "opportunity" albeit one that was not an "every day event".
Tiong also disagreed with Loh's suggestion that over RM540 million in potential gains had "vanished" when EONCap's previous management declined HLBB's initial offer price of RM4.92 billion.
"I think the bank shares value is still there. I was not entirely worried. It did not vanish," Tiong said.
Tiong was also asked by his counsel, Gopal Sreenevasan, to clarify Tiong's allegation, made in an affidavit, that EONCap's previous management had "concentrated on creating obstables" in plans to table HLBB's offer to EONCap shareholders.
On Wednesday, Loh had referred Tiong to minutes of EONCap's board meetings on Jan 22 and Jan 25 to clarify Tiong's allegation.
Quoting parts of his affidavit, Tiong said on Friday that Primus had already decided it was not interested in HLBB's proposal as it "did not realise the group's underlying value".
"Even before Goldman Sachs presented their views, they (Primus) already put up the intentions and this is a big obstacle for us," Tiong said.
Tiong also said another "obstacle" was that EONCap's board spent too long deliberating on Goldman Sach's opinion on HLBB's offer.
Hearing of the keenly-watched case is scheduled to resume on Oct 20. The court had earlier fixed three days for hearing but Judicial Commissioner Varghese George Varughese also set additional dates after meeting lawyers in chambers at the close of proceedings today.
The next witness scheduled to appear is EONCap substantial shareholder Rin Kei Mei.
Written by Chua Sue-Ann
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