Highlight Tussle for Harvest Court

by **Cals** Thu 12 Jun 2014, 02:51

Highlight Tussle for Harvest Court

Business & Markets 2014

Written by Janice Melissa Thean & Siow Chen Ming of theedgemalaysia.com

Wednesday, 11 June 2014 09:11

KUALA LUMPUR: A tussle for control of Harvest Court Industries Bhd, of which prime minister’s son Mohd Nazifuddin Mohd Najib was briefly a director in 2011, has broken out between Datuk Eddie Chai Woon Chet and Datuk Raymond Chan Boon Siew, with former IT entrepreneur Kenneth Vun being dragged into it.

All three businessmen are from Sabah and were known for the sharp spike in the share prices of some of the companies linked to them.

Chai is the son of Sabah timber tycoon Tan Sri Chai Kin Kong, whose family was a major or substantial shareholder of listed companies such as Eastland Equity Bhd and Sanbumi Holdings Bhd, to name a few.

Chan was well-known for his “partnership” with Nazifuddin in gaining management control of Harvest Court in 2011. He is still the managing director and chief executive officer of Harvest Court, and owns about 7.05% of the timber door maker-cum-construction outfit after a series of share disposals.

Vun, meanwhile, was previously known for FTEC Resources Bhd, once a darling in the stock market. Having sold out of FTEC in 2007 after he ran into trouble with the Securities Commission, the Sabahan had been out of the corporate limelight for a while now, until his name was oddly mentioned in a Harvest Court’s announcement to Bursa Malaysia yesterday, which seems to have pitted Chai against Chan.

Based on the announcement to Bursa, Zenith City Investments Ltd, led by Chai, has taken legal action against Harvest Court for failing to act on its notice dated May 12 requesting certain resolutions to be considered and passed at the company’s intended Annual General Meeting (AGM) which is to be held on/before June 30, 2014.

Zenith City had proposed the appointment of Chai, Wong Kwai Wah and Datuk Seri Abdul Azim Bin Mohd Zabidi to the board of Harvest Court.

Interestingly, according to Harvest Court’s announcement to Bursa, Chai had actually revealed to Chan on May 9, that he together with Zenith City and other third parties collectively hold a 33% to 34% shareholding in Harvest Court.

Chai, according to the Harvest Court’s announcement, had also claimed that Vun held more than a 10% stake in Harvest Court and was in support of Chai.

There is however no official record of Vun’s shareholding in the company, said Harvest Court, which also stated that Chai had also told Chan that he intended to inject some of his own property development projects into Harvest Court, but no details were provided.

According to latest filings to Bursa, Chai had been progressively increasing his stake in Harvest Court by virtue of his holdings in Zenith City, and has a 19.55% stake as of June 6, compared with 10.1% a month ago.

“On May 28, 2014, the company [Harvest Court] had called for another Board meeting to discuss the Notice. After due deliberation and considering the legal opinions from the solicitors, the Board decided that the Company not to comply with the Notice and proceed to hold its AGM on June 20, 2014 without circulating the Notice,” said Harvest Court.

Harvest Court said it decided not to circulate the notice served by Zenith City to its shareholders as it detected several breaches in the case.

“At all material times, there is no disclosure or notification from Kenneth Vun that he holds more than 10% of the company’s shares,” it said in its filing to Bursa.

This would mean a breach of Section 69E of the Companies Act 1965 for failing to notify the company of his [Vun] substantial shareholding.

“Further, in the event that the requisitionists do collectively have 33% of the company’s shares, it is mandatory for them to make a mandatory general offer (MGO) to the company’ shareholders as per Section 9(1) of the Malaysian Code on Take Overs and Mergers 2010.”

“However, it seems that the requisitionists may be attempting to avoid the MGO when they failed to formally disclose their substantial shareholding to the company, which could possibly be a breach of Section 9(1) of the Code,” said Harvest Court.

“Section 13(1) of the Code has an implied prohibition against participating in management of a target company without making a mandatory offer,” it adds.

“The board is of a view in light of the prohibition and the breaches aforesaid and further in their duty to protect the interest of all shareholders, have decided not to circulate the proposed resolutions,” it said.

Harvest Court added that it is seeking legal advice to resolve and/or defend against this matter. Further announcement on the development of the above matter will be made to Bursa in due course, it said.

Yesterday, Harvest Court saw its share price gain some 5.7% to close at a 52-week high of 37 sen, which gave the company a market capitalisation of RM 99.4 million.

Interest in the stock has been piqued for a while now with prices surging some 54% since May 8 at 24 sen, with heavy trading volume.

This article first appeared in The Edge Financial Daily, on June 11, 2014.