Apex showdown on the cards?

KUALA LUMPUR: A brewing shareholder tussle at Apex Equity Holdings Bhd may eventually lead to a hostile takeover.

Speculation of a takeover has led to strong trading interest in the counter that hardly saw much activity in the past.

The stock price has surged over 70% in the past three weeks to a 10-year high of RM1.42 after it had been below 85 sen for five years.

It is learnt that insurance firm Pacific & Orient Bhd is accumulating shares on the open market. However, it is not known if the shares are purchased for trading purposes or to assist a substantial shareholder in the brewing shareholder battle.

The growing trading interest in the stock is mainly fuelled by anticipation that a general offer is possibly on the cards following the failed bid by former executive chairman Chan Guan Seng and former director Lew Lup Seong to seek re-election to the board at the AGM late last month.

However, the board, which was then left with only two directors after the AGM, reappointed Chan as executive director two days after the shareholders’ meeting.

Having flexed its muscle at the AGM, the faction against Chan is expected to convene an EGM soon to oust the entire board of the stockbroking firm.

But if that happens, it would mean triggering a mandatory general offer under Bursa Malaysia’s listing rules.

Fun Sheung Development Ltd is the single largest shareholder of Apex Equity with 14.96%.

Chan, who has been at the helm of Apex for a long time, owns direct and indirect stakes of 12.55%.

The other notable shareholders of Apex are Datuk Azizan Abdul Rahman with 3.86%, and companies aligned to Lim Siew Kim of Metroplex Bhd.

Lim is a key figure in Apex. She is the daughter of the late Tan Sri Lim Goh Tong and the spouse of Dick Chan, the elder brother of Guan Seng.

Based on the shareholders’ list, Metroplex has 6.3% or 13.49 million shares pledged to Arab-Malaysian Credit Bhd. Apart from Metroplex, there are other companies with shares in Apex linked to Lim.

However, it is unclear if Lim is aligned to Chan in his fight to keep control of Apex.

Chan could not be contacted for comments on the matter.

Adding spice to the brewing battle was the transfer of a large chunk of shares last Tuesday.

A block of 13.5 million Apex shares changed hands at 92 sen each at a sharp 30% discount to the closing price of RM1.33 on the day and about 27% on the previous day’s closing price of RM1.26.

The shares crossed in the off-market deal are believed to be the block that Metroplex had pledged to Arab-Malaysian Credit, considering the equity stake is similar.

Approval from the stock exchange is required for shares traded at a substantial discount. The large discounts on the two off-market transactions had raised eyebrows.

There is no filing with Bursa Malaysia regarding the buyer and the seller of the shares.

But the beneficiary of the block of shares would be decisive in the brewing battle for Apex.

Executives familiar with the company said the buyer of the block of shares is believed to be a friendly party to Lim, considering the large discount on the market price.

Parties aligned to Chan said they were not aware of the buyer.

The executive said the faction opposing Chan seems to be taking strategic moves to oust the board.

“If it is true that the 6.3% block is used as a launching pad to gain control of the company, a general offer, if it happens, would be priced only at about 92 sen each, which is far below the market price,” he said.

Apex’s share price climb to a high of RM1.42 — highest level since April 2002 — last Wednesday had narrowed the discount on its net asset value of RM1.45. It closed at RM1.34 last Friday.

For the financial year ended Dec 31, 2011, Apex posted a net profit of RM18.3 million or 8.97 sen per share, compared with RM15 million or 7.25 sen per share a year ago. Revenue was higher at RM51.3 million against RM47.7 million.


This article appeared in The Edge Financial Daily, July 16, 2012.