Wednesday October 24, 2012
Squabble at Scomi
By B.K. SIDHU and RISEN JAYASEELAN
PETALING JAYA: The ongoing squabble at Scomi Group Bhd is likely to turn the attention to an upcoming EGM where shareholders will have to approve the issuance of new shares amounting to around 15% in equity to IJM Corp Bhd, insiders say.
IJM, which has already bought a 10% stake in Scomi, had subscribed to Scomi's redeemable convertible secured bonds that can be converted into new shares of the latter. If and when that transpires, then IJM will emerge as the clear single-largest shareholders of Scomi, with a 25% stake.
Sources said the EGM would probably be called in two to three months and the only party that could not vote at the EGM is IJM. A simple majority of votes is needed to approve IJM's stock conversion into equity.
Although some insiders reckon that IJM is in no hurry to embark on that conversion it has three years to do it recent developments may necessitate it to do so.
It has been reported that recently, Scomi's other new major shareholder, Datuk Siew Mun Chuang, had sent letters to the Scomi board alleging that the deal with IJM will dilute minority shareholder value in Scomi.
Siew is said to be linked with Tan Sri Abu Sahid Mohamed and collectively, they control around 14.36% of Scomi at present. This is just slightly lower than the 14.87% held by Shah Hakim Zain, the chief executive officer of Scomi Group Bhd, together with his business partner Datuk Kamaluddin Abdullah, the son of former prime minister Tun Abdullah Ahmad Badawi.
“The letters tend to suggest that there is hostility and a boardroom battle may be in the brewing at Scomi,'' said an insider.
Siew also alleged in the letters that “the directors of Scomi are failing in their fiduciary duties in protecting the rights and interest of all Scomi shareholders'' and he wants them to alter the group's corporate restructuring plan.
Siew is apparently also threatening legal action if the matter is not “remedied”. He is reported to be also considering the “removal and replacement of the current board and those in the management of the company”.
IJM first emerged in Scomi about a month ago when it bought a 10% stake for RM39.3mil cash and took an additional 15% via the bonds when converted into new shares for RM110mil.
A day after IJM emerged, Siew announced that he had bought 5.61% equity stake in Scomi and along with him, businessman Abu Sahid also said he was raising his stake in Scomi to 8.75%.
Siew's two letters to Scomi's board is seen by some as an attempt to stop IJM from being a major shareholder in Scomi and to prevent a dilution of his and Abu Sahid's stakes in the company.
While Siew's view is that Scomi should have examined the possibility of conducting a rights issue to raise monies to repay its overdue bonds, insiders reckon that that would have been challenging, given the financial dire straits that Scomi was in.
What Siew's plan is unclear but insiders don't rule out him calling for an EGM to attempt to remove the board. Siew and his allies may also be looking to raise their stakes in Scomi.
Siew, Abu Sahid, IJM and Shah Hakim could not be reached for comment.