Top local banks declined to offer for EONCap, court told

Goldman Sachs had approached foreign and local banks in search for prospective bidders after Hong Leong Bank Bhd (HLBB) made its offer to takeover EON Capital Bhd’s (EONCap) banking assets, the court was told yesterday.

The US-based Goldman Sachs is the independent financial adviser engaged by EONCap board to look for interested parties to counter offer HLBB’s bid.

EONCap chairman Gooi Hoe Soon, the last witness taking the stand in proceedings, said Goldman Sachs’ “wide mandate” involved guiding the EONCap board on strategies on how to defend against unsolicited offers and to source for other offers to counter HLBB’s unsolicited bid.

Gooi said Goldman Sachs had in early 2010 approached three foreign banks with operations in Malaysia, namely Industrial and Commercial Bank of China (Malaysia) Bhd (ICBC Malaysia), HSBC Malaysia Bank Bhd and Standard Chartered Bank Malaysia Bhd.

“They (Goldman Sachs) shortlisted and also wanted to scout the Middle East. But no names were given (to the board),” Gooi said when cross-examined by Tan Sri Cecil Abraham, who is representing several EONCap directors named in the suit brought by Primus (Malaysia) Sdn Bhd.

Primus, the Malaysian unit of Hong Kong-based Primus Pacific Partners Ltd which holds a 20.2% stake in EONCap, had filed a suit on June 21, 2010 claiming some RM1.12 billion in damages should HLBB succeed in acquiring EONCap’s assets and liabilities.


In its suit, Primus had named as respondents nine EONCap directors, three EONCap shareholders and EONCap as the nominal respondent.

According to Gooi, the local banks approached by Goldman Sachs included Malayan Banking Bhd (Maybank), Public Bank Bhd, CIMB Group, Alliance Financial Group Bhd, RHB Capital Bhd and AmBank Bhd.

Goldman Sachs later informed EONCap’s board that Maybank, CIMB and Public Bank had declined to make an offer, Gooi added.

Gooi also revealed that Affin Holdings Bhd was not named as one of the banks approached by Goldman Sachs in the early stages.

In May last year, Affin Holdings announced that it had applied for approval to Bank Negara to enter into merger talks with EONCap but the plans were scuttled after the central bank turned down Affin Holdings’ request.

Apart from Goldman Sachs, the EONCap board had received input from many advisers, including Credit Suisse, MIMB Investment Bank and legal advice in deliberating HLBB’s takeover offer.

“If it is a RM5 or RM10 (per share) offer, it’s an easy decision. But the offer was right smack in the middle,” Gooi said of HLBB’s offer.

Gooi also said Goldman Sachs was paid a base fee of US$500,000 (RM1.52 million) for its services with the fees structured on a “tier up” basis depending on the value of any successful bid it brought to the table.

Last November, EONCap director Nicholas John Lough told the court that Goldman Sachs would be paid a fee of up to US$3 million if it could arrange a disposal transaction of up to 1.5 times price-to-book value for EONCap.

HLBB’s revised offer of RM5.06 billion cash or RM7.30 per share is 1.43 times book value based on EONCap’s shareholders’ funds of RM3.55 billion as at Dec 31, 2009.

The revised offer was slightly higher than its previous offer of RM4.92 billion for EONCap’s assets and liabilities which translated into RM7.10 per share or 1.39 times book value.

After Gooi’s evidence yesterday afternoon, Judicial Commissioner Varghese George Varughese then met lawyers in chambers to set dates for the remainder of the proceedings which includes dates for written submissions and replies to be filed in court.

It is learnt that the court has tentatively fixed mid-April to deliver its decision on the matter, just ahead of the April 30 deadline set by HLBB for EONCap to accept its offer. - by Chua Sue-Ann, theedgemalaysia.com