Sharing of Tan Chong assets dispute settled

PETALING JAYA: The family of Datuk Tan Kim Hor will receive its share of assets in the regional Tan Chong group over five years, while the late Tan Sri Tan Yuet Foh’s family has entrenched its control in the group following a settlement, sources said yesterday.

The Malaysian-listed companies in the group – Tan Chong Motor Holdings Ltd, APM Automotive Holdings Bhd and Warisan TC Holdings Bhd – announced on Tuesday that shareholders of Tan Chong Consolidated Sdn Bhd (TCC) reached a compromise and settlement agreement based on a progressive release of shares in the listed companies to TCC’s exiting minority shareholders.

Tan Chong International Ltd, which is listed in Hong Kong and Singapore, might make a similar announcement soon, the sources said.

Yuet Foh’s family had owned 55% of ultimate holding company TCC and Kim Hor’s family owned 45%. Yuet Foh and Kim Hor were co-founders of the regional businesses.

It is understood that prior to Tuesday’s announcement, Yuet Foh’s family bought an additional 20% in TCC, raising its stake to 75%. The shares were bought from certain members of Kim Hor’s family.

That purchase strengthened the hold of the Yuet Foh’s family on the group companies. Tan Chong Motor, for instance, is 46.3% owned by TCC. Yuet Foh’s interest was 55% of that 46.3%, which was just 25%. That made it vulnerable to losing control of the company one day.

Following the purchase, the family’s stake of Tan Chong Motor is now 75% of 46.3%, which is 34.7%, a much firmer ownership.

It also had the effect of trimming the stake of Kim Hor’s family to 25% of TCC.

Kim Hor’s family will receive shares in the listed companies proportionate to its 25% stake of TCC. The shares would be placed with a trustee who would release the shares to them over a five-year period, the sources told StarBiz yesterday.

In the Tan Chong Motor instance, its 25% share of TCC’s 46.3% stake in the company amounts to about 11.6%. Under the agreement, it will receive a fifth of that, or about 2.3% of Tan Chong Motor’s equity each year over five years.

Kim Hor’s family may not hold on to minority stakes and may sell them for which Yuet Foh’s family has the right of first refusal to buy.

The five-year release of the shares will give Yuet Foh’s family time to gather the funds to buy the shares, while the time gives Kim Hor’s family upside in the value of the shares should they rise in price.

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