All eyes on Lysaght AGM

by **Cals** Sat 27 Jun 2015, 23:16

All eyes on Lysaght AGM

Saturday, 27 June 2015
By: INTAN FARHANA ZAINUL

Upcoming meeting will decide on fate of managing director
THE upcoming AGM of Lysaght Galvanized Steel Bhd on Tuesday will be a closely watched one. At that meeting, shareholders will decide on the usual reappointment of its directors.
But the AGM is likely to be anything but usual: there is a chance that key executive Liew Hoi Foo, the managing director of the company since 2004, may not get re-elected as a director.
And if that happens, it will be a clear indication that the major shareholder of Lysaght is unhappy with the current management of the company.
To understand this, one needs to go back to the on-going saga at Lysaght.
According to insiders, soon after Lysaght’s founder Chew Kar Heing passed away in February, a proposal was made for a significant corporate exercise to take place, namely a share split, bonus issue as well as free warrants convertible at 50 sen a piece.
It is understood that this proposal had irked the major shareholder of Lysaght. Lysaght’s controlling shareholder is Lysaght Malaysia Sdn Bhd (LMSB), which owns 55% of the company.
LMSB, in turn, is owned by a number of parties: 40% by the founding Chew family, 17% by Liew, 11.6% by Singapore-listed United Engineers Ltd, 4.7% by Tan Sri Abdul Rashid Manaf and the remaining 26.6% by bumiputra individuals and companies.
It has been reported that Liew had not attended the LMSB shareholders meeting, which had decided to vote against the proposed corporate exercise.
Insiders say that some of the major shareholders were taken aback by the proposed warrants exercise as it involved forking out money for the warrant conversion if these parties did not wish to be diluted. Furthermore, Lysaght is a debt-free company that churns out sufficient cashflow for reinvestment, insiders point out.
LMSB is currently helmed by the late Kar Heing’s eldest daughter Annie Chew Meu Jong.
Meanwhile, Liew, 60, is the son-in-law of Chew, the only executive director and also a substantial shareholder of Lysaght with almost 19% shareholding.

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Liew and his wife Mary Chew Mee Lee, the second daughter of the late Kar Heing, have been accumulating shares in Lysaght for sometime. Their private vehicle, Ingli Sdn Bhd, had raised its holding in Lysaght from 5% in 2006 to 15.46% today.
On the other hand, Meu Jong, 59, has never been involved with Lysaght’s operations in Malaysia until few years ago. She migrated to Australia in 1986 and has been taking care of Lysaght’s operation there. She joined Laysaght’s board in 2003 and was promoted to managing director in LMSB in 2004 following her father’s retirement.
Following the rejection of the proposed corporate exercise, the saga in Lysaght continues following the removal of Lim Lee Kuan in June. Lim is Liew’s mother-in-law and also the founder’s wife.
To fuel the tension, Meu Jong had reportedly made five attempts to be on the board of Lysaght. Only after her sixth attempt was Meu Jong appointed as a non-executive director. The Chew family has been running its business through Lysaght and Lysaght Corrugated Pipe Sdn Bhd (LCP) with LMSB as a parent company. LCP is 100%-owned by LMSB and control by Meu Jong.
Lysaght, which specialises in the production of steel poles, power transmission masts and decorative poles, while has been profitable, has not been enjoying significant growth. Its net profit jumped 29% to RM15.1mil in its financial year ended Dec 31, 2013 (FY13) from RM11.7mil in FY12. But its profits dipped 26% in FY14 to RM11.2mil.
The company though has been paying attractive dividends.
Since FY12, it has been paying a total divided of 12 sen per share per annum. For FY14, the company announced a bumper dividend payout 50 sen per share, which is equivalent to 12.5% yield at its current share price of RM4 a piece.
Collectively, both the Chew family and Liew have a 70% stake in Lysaght. Hence some quarters claim that the earlier proposed corporate exercise would have enhanced the liquidity of the tightly held company.
The debt-free Lysaght has cash of around RM33mil.
Last week saw another development at the company indicating the ongoing tussle: a shareholder had taken legal action to postpone the company’s AGM, which had been slated for June 22, on the basis that a short notice given to shareholders on the appointment of certain directors.
While the June 22 AGM went ahead, the court issued an order for a second AGM to be held on June 30.
It will be this AGM, on Tuesday, that will decide on the re-election of Liew and four existing directors, as well as the election of two new directors.
In an interesting development, Liew has told a business weekly that he may divest his 19% stake in the event he fails to get reappointed to the board of Lysaght.
It would be interesting to see how this ongoing saga unfolds.