Monday, August 26, 2013

Scope/Matang (MCA)

While Mating Holdings Bhd’s minority shareholders have been planning to seek the liquidation of its plantation and property assets and have the proceeds distributed back to shareholders, Scope Industries quietly announced it had reached agreement with the new board of Matang to extend the period of the Business Merger Agreement dated Nov 19 2012 for a further nine months.

The determination of Scope to gain control of Matang’s assets is remarkable considering the politics behind the saga. At least one former senior executive is alleging that to continue talks with SCOPE is bad faith especially as the EGM had decided on the matter.

It is inconceivable that Matang BOD is prepared to even consider with SCOPE. The shareholders of Matang have already indicated during the previous EGM that the terms of the proposal from SCOPE are unacceptable.

The current (Aug 2013) BOD is acting in bad faith to go against the resolution passed on May 21 2013 to reject the proposal. The deal must involve the payment of cash for Matang’s assets.

For the record, in Matang’s EGM on May 31 2013, minority shareholders opposed the merger proposal saying SCOPE was offering too low valuation for its assets. Dejected, Matang’s BOD led by chairman and MCA politican Datuk Seri Tan Chai Ho resigned in masse.

Matang is an investment holding company with interests in plantations and property. Its largest shareholder is Hauren Holdings Sdb Bhd, the MCA’s investment vehicle, holding 12.83 million shares or 10.72% as of Oct 1 2012. Lau Chek Min Sdn Bhd is its second largest shareholder with a 1.19% stake. Bee Garden Holdings Sdn Bhd, linked to Country Heights deputy chairman Tan Sri Lee Kim Yew holds 0.65% of Matang.

Matang’s minority shareholders collectively hold over 80% of the company. Most minority shareholders are from Johor, accounting for 81.48% of its shares.

Matang minority shareholders are said to be divided into two camps. One is the Country Heights Lee faction, while the other camp is led by Lau Chek Min Sdn Bhd’s Lau Liang Fook. It is understood that both camps are friendly parties and oppose the disposal if Matang assets to SCOPE. Lee’s faction is said to be led by Datuk Tan Teck Poh, also chairman of the Parit Sulong MCA division in Batu Pahat, Johor. MCA president Datuk Seri Chua Soi Lek is also chairman of the Batu Pahat MCA division.

Observers point out that Chua possibly had a hand in pushing the deal, The deal will not go through without the blessing of Chua who is seen to want to get the business concluded quickly. Before this, several MCA politicians openly voiced opposition to the merge, resulting in Hauren deciding not to exercise its voting rights during the EGM. This time, if Hauren decides to vote, the proposal is as good as a done deal. It is said that parties friendly to Hauren can garner as much as 15% vote, which will see the merger go through.

Having lost faith in Matang’s BOD, its minority shareholders are reportedly seeking to liquidate Matang’s assets for at least rm200 million and have its profits distributed to shareholders.

To recap, on Nov 19 2012, Scope announced that it was considering a business merger proposal between Matang, in a deal worth rm145 million. With the deal, Scope would assume all of Matang’s assets, which would be wholly owned satisfied through the issuance of 680 million Scope shares valued at 25 sen each.

In the same Nov 19 2013 proposal, Scope was proposing to acquire a 100% stake in Benua Mutiara Sdn Bhd for rm31.72 million. Benua Mutiara owns 317.2ha of oil palm plantation land and is controlled by Chew Kong Yoon, who has a 33% stake in it.

The merger with Benua Mutiara went through smoothly, in sharp contrast to the proposed merger between Matang and Scope.

Scope has seen some interesting changes since Matang’s EGM in May 2013. Scope has diverse interests which include electronics manufacturing, trading and oil palm plantations. As a result of the Benua Mutiara merger, Chew has a 10.73% stake in Scope emerging as a substantial shareholder. Later Chew increased his stake to 18.46%.

Chew has emerged as the largest shareholder in Scope. Wah Len Enterprise Sdn Bhd, its second largest shareholder has 13.99% stake while Lim Chiow Hoo, Scope’s MD has 12.28% in the company.

Wah Len is controlled by Datuk Lim Chee Wah, a son of late Tan Sri Lim Goh Tong.

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