(Petaling Jaya, Wednesday): Last Friday, 9th January 1998, Commercial International Bankers Bhd ("CIMB") on behalf on United Engineers (Malaysia) Bhd (UEM) released details about the UEM Emergency General Meeting (EGM) of shareholders to be held on February 14 to ratify or reject the highly controversial RM2.34 billion acquisition of 32.6 per cent stake or 722.9 million shares in Renong Bhd.
The second matter to be decided at the EGM, subject to approval given to the acquisition, is to approve or reject the put option by Tan Sri Halim Saad (TSHS).
The Notes of Release by CIMB explained that the "put option" on Halim Saad means TSHS give the option to UEM to dispose of its Renong (i.e. 722.9 million) shares to him at UEM's acquisition cost (ie. RM3.24 per share, or total about RM2,342 million) plus UEM's holding cost. The exercise time is after two years, but no later than three years from the EGM date. The Securities Commission has given waiver of mandatory general offer when this put exercise is effected, subject to two conditions: (a) there should be no change in the existing structure and members of group controlling Renong at the time when the put option is exercised by UEM; and (b) upon exercise of the put option, TSHS's aggregate voting rights in Renong must not exceed 50%.
What is surprising is that it is made very clear in the CIMB release that Renong, which is a substantial shareholder of UEM holding 37.1% UEM equity, would exercise its voting rights "in respect of its direct and indirect shareholding" in the UEM's EGM on the first question of acquisition.
As the CIMB specifically states that TSHS and Renong would abstain from voting in the second item on the TSHS put option, it would appear that Tan Sri Halim Saad would be exercising his voting rights in respect of his direct and indirect shareholding in UEM.
What is the amount of Halim Saad's direct and indirect shareholdings in UEM?
Would the direct and indirect shareholdings of Renong and Halim Saad in UEM exceed or approximate 50 per cent?
Halim Saad and other parties acting in concert with him should disclose their full shareholding interests in UEM, for if they already enjoy majority interests, the EGM is just a farce.
It would thus seem that it is highly unlikely that the acquisition proposal would be rejected in view of Renong having a high 37.1% voting rights in UEM, and the other unspecified shareholding in UEM by Halim Saad and other concert parties The question minority UEM shareholders have a right to ask is whether it right, proper and fair for Renong to exercise its 37.1% voting rights in UEM in the UEM EGM on 14th February on whether to approve UEM's RM2.34 billion acquisition of 32.6% stake in Renong as well as for Halim Saad and other parties acting in concert with him to exercise their voting rights on the question?