EON Cap battle goes to court

  • Business
  • Tuesday, 22 Jun 2010

PETALING JAYA: The widely-speculated development in the takeover tussle involving EON Capital Bhd by Hong Leong Bank Bhd (HLB) has finally happened.

Primus Pacific Partners Ltd has taken legal action against nine board members of EON Cap and three entities controlled by Rin Kei Mei and Tan Sri Tiong Hiew King who are shareholders in the banking group.

The events that have transpired since EON Capital received the “first unsolicited offer” from HLB in January this year to acquire its assets and liabilities “have forced Primus to make a reluctant and difficult decision to file a legal action in order to safeguard the interests of the company, the management team, employees, and all of EON Cap’s shareholders”, the company said in a statement.

The suit was filed yesterday on behalf of the Hong Kong-based private equity fund by legal firm Cheang & Ariff under Section 181 of the Companies Act, which applies to cases where:

(i) the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to shareholders or in disregard of their interests; or

(ii) some act of the company has been done or some resolution passed or is threatened to be done or passed which unfairly discriminates against or is otherwise prejudicial to shareholders.

Primus is EON Cap’s largest shareholder with a 20.2% stake while Rin and Tiong collectively own 32.6%. The only board member of EON Cap who was not named as respondent is Ng Wing Fai, Primus’ managing partner.

“The decision to file the legal action has been a difficult one, but was something that had to be done ultimately. We have secured a number of legal opinions that come to the conclusion that the manner in which the offer is proposed to be implemented is unlawful,” said Primus managing director Jeroen Nieuwkoop.

“This is one of the key drivers of our decision to move forward with our legal action and to preserve and protect all that has been achieved through the hard work and effort of EON Cap’s management team and staff over the last two years.”

He also alleged that the “conduct in the management of the affairs of EON Cap and the manner in which directors’ fiduciary powers have been and continue to be exercised by the respondents throughout the course of these events is inconsistent with and violates the core principles of law as well as the proper standards of corporate governance as promulgated by Bank Negara, Bursa Malaysia and the Securities Commission.”

“The objective of our legal action therefore is to protect the interests of all EON Cap shareholders, and to ensure that the highest standards of corporate governance in accordance with the laws of Malaysia are being upheld in the implementation of a corporate exercise of this importance and scale,” he said.

The action by Primus has caught some by surprise as many were expecting the company to take the direct route of filing for a court order to stop the sale of EON Cap to HLB. Primus explained in the statement that the legal action does not seek an interim injunction as it would only be a “temporary remedy and not in the interest of the various stakeholders.”

“Given the urgency of the matter and importance of a swift and final resolution, a certificate of urgency will be filed for the subject matter to be resolved with finality,” it said, adding that it is a long-term investor in the country and firmly believes in the strong potential inherent in the country’s financial services sector.

The court has fixed a return date for July 6. The timing of the filing follows a day before EON Cap is scheduled to hold its annual general meeting (today), which as a result, promises to be eventful.

In a late announcement to Bursa Malaysia yesterday, EON Cap said it had received a petition containing several complaints brought by shareholder Primus (M) Sdn Bhd against the company and all its directors except for Ng Wing Fai.

“The board of directors will seek legal advice on the matter and any further development will be announced in due course,’’ it said.

EONCAP :  [Stock Watch]  [News]  HLBANK :  [Stock Watch]  [News]For latest Bursa Malaysia indices, charts and other information click here

For latest Bursa Malaysia indices, charts and other information click here

Related Stories: HLB modifies terms to acquire EON Cap Primus: Legal action due to buyout-related issues HLB-EON Bank merger a concern for NUBE Bank Negara unlikely to be pressured over decision on Affin-EON Cap talks

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