Defer decision to buy stake in MMM, says Watchdog Group

Kuala Lumpur: The Minority Shareholder Watchdog Group (MSWG) wants Maruichi Malaysia Steel Tube Berhad (Maruichi) to re-consider and defer its decision to proceed with the purchase of 32.5% in Malaysian Merchant Marine Berhad (MMM).

The full payment of RM99.9 million acquisition cost is payable within 14 days from 4 December 2002, i.e. by tomorrow, 18 December 2002.

MSWG’s CEO Yusof Abu Othman says MSWG has received many phone calls, e-mail and faxes from the public to urge the Maruichi Board to hold on to implementing its decision and to call for an EGM for this acquisition to be voted on by all shareholders. Some minority shareholders had even come personally to us to lodge their sentiments.

“I want to emphatically stress that there appears to be no question of any breach of law at this point in time. Nor are we making any insinuation of wrongdoing or sinister move by any party.”

“But we wish to state that there seems to be an unholy haste to spend RM99.9 million in cash in a deal on which little information has been divulged to the shareholders, in particular the minority shareholders,” says Yusof at a press conference here. Also present were minority shareholders who had lodged their complaints to the Watchdog Group, and who had wanted to be present at the Press briefing.

The Employees Provident Fund (EPF) has also sent a copy of its complaint to the watchdog group, registering its view that more time should be given to minority shareholders to evaluate and assess the transaction.

The EPF also called for an EGM to be convened and shareholders’ approval be sought with regard to the deal. It is understood that Maruichi has yet to send its circular on the acquisition to shareholders, including EPF, justifying the rationale to proceed with this deal about which and many have voiced their strong protest.

MSWG, as the voice of the minority shareholders, and in response to the requests of the investing public, believes that an EGM is the first unconditional order of the day for Maruichi, if its current Board believes in good corporate governance dealing with material acquisition costing the company RM99.9 million cash into a new and hitherto unrelated business requiring specialised skills.

“If an EGM is called for, some re-calibrations may be needed in the interest of the shareholders. It’s usually normal for all shareholders to receive a circular providing full and detailed information of the rationale of the proposal and of its positive impact on the immediate and near future results of Maruichi,” says Yusof.

Yusof urges the Maruichi board to take cognizance of the fact that any deal that appears controversial may not be in the best interest of enhancing the credibility of the Malaysian Capital Market, particularly to global fund manager of international institutional investors.

As far as MSWG can determine, based on information made available to the public, no harm or disadvantage will befall Maruichi if it places all its available comprehensive findings and evaluations of the proposed deal in a circular to all shareholders for them to vote on at an EGM to be convened later.

MSWG believes the whole episode is about acting honourably and in wanting to do the right thing, about compassion and a caring attitude towards the minority shareholders, about the magnanimity of being willing to re-consider a position when there are strong differing views from many quarters, including its shareholders who have not been consulted yet at an EGM; as the Maruichi Board discharges its fiduciary duties.

“These complainants do not have any agenda in the deal other than in wanting what’s good for Maruichi and the Malaysian Capital Market that supports all of us in the final analysis. No one should forget that!”

“Does the current Maruichi board have what it takes? The Malaysian Court of Public Opinion is watching closely, particularly as Maruichi has come a long way since 1969, with an impressive track record and reputation among Malaysian companies. A commendable and hitherto successful collaboration between Malaysian and Japanese investors supported by domestic institutional investors including EPF, PNB and SOCSO”.

Surely, Yusof says, Maruicihi wants to maintain its good name and hopefully, will take into consideration the views of others –more so when these views are positive and constructive in the interest of the company with regard to its operations and bottom-line.

MSWG also calls upon the authorities – the KL Stock Exchange and the Securities Commission – to look into the case carefully, if they have not already done so with the view to stopping or preventing transactions which may have breached certain KLSE listing requirements, relevant provisions of the Malaysian Code on Take-overs and Mergers 1998, and relevant sections of the Securities Industry Act 1983 and the Companies Act 1965 or any other laws of Malaysia.

In essence, the investing public, in particular the minority shareholders have the right to know and if Maruichi practices shareholder democracy, its new board, especially the audit committee, should make all transactions transparent, be accountable and willing to be responsible for their action. The time for talking is over. Its action that matters, that will reveal the actual state of corporate governance in Maruichi today.

YUSOF ABU OTHMAN
Chief Executive Officer
For & On Behalf Of
BADAN PENGAWAS PEMEGANG SAHAM MINORITI BERHAD