Apex clears hurdle for merger with Mercury

  • Business
  • Thursday, 20 Jun 2019

Non-independent non-executive director Datuk Azizan Abdul Rahman(pic) said now that the approvals were secured, the company would proceed to obtain a vesting order from the High Court within two months. The proposed merger is expected to be completed by September.

KAJANG: The battle in Apex Equity Holdings Bhd has taken a major turn with shareholders voting in favour of the merger with Mercury Securities Sdn Bhd in a slim majority of 54.8%.

Almost half, or 45.2% of the shareholders, voted against the proposed merger, which will see Mercury’s stockbroking, corporate advisory and other related businesses being transferred to Apex’s wholly owned subsidiary, JF Apex Securities Bhd.

The same number of votes were also obtained for the proposed private placement of 20 million new ordinary shares, which would represent around 6.2% of Apex’s enlarged issued share capital post-merger and placement, with 54.8% voting in favour.

Non-independent non-executive director Datuk Azizan Abdul Rahman said now that the approvals were secured, the company would proceed to obtain a vesting order from the High Court within two months.

The proposed merger is expected to be completed by September.

It is learnt that various questions related to the merger were raised by shareholders during the EGM/AGM at Menara Apex yesterday, but Azizan said they were “normal questions”.

“It was quite a number but we have answered them and I feel that we have satisfied whatever queries and questions they have posted to us. It’s mainly on the merger exercise, benefits and matters raised in previous (news) reports.

“In fact, before the start of the AGM, we had another presentation by Alliance on the benefits of the merger,” he said.

Apex had entered into an agreement to merge with Mercury in September last year, in what is deemed to be a move to address the issue of ACE Investment Bank Ltd’s 23.73% stake in Apex.

The Securities Commission (SC) approved the merger but on the condition that ACE Investment exits Apex and fully disposes its shareholdings within six months of the merger’s completion date.

ACE Investment also has to cease being on Apex’s board in the immediate term upon the completion of the exercise, and also sell down its shareholding in Apex to below 15% within a month from the date of completion.

Mercury will hold about 31% of the merged entity and the dilution in equity will see ACE Investment ’s stake dropping to 15.71% post-merger due to the new issues of shares.

The SC has also rejected the application of JF Apex for ACE Investment to be its controlling shareholder.

Asked on the appeal against the conditions imposed by the SC, Azizan said the regulating body made it clear that whatever conditions it imposed would be dealt directly with ACE Investment.

“We don’t know what is the result. You have to ask ACE Investment for that. It has got nothing to do with Apex because it’s decoupled. For purposes of the merger, there’s no impediment on Apex. The regulators have said they would deal with ACE Investment directly. We are not privy to the investigations on ACE Investment,” said Azizan, adding that ACE Investment only had one representative on Apex’s board and was not going to be a dominant shareholder.

Meanwhile, Azizan also said there would be a consolidation exercise by scaling down cost with the removal of duplications such as hardware and IT infrastructure for the merged entity to be more cost-effective and efficient.

“We view Mercury as a suitable partner because it has a very good track record as far as management and profitability is concerned, and on top of that, it has the corporate finance operation which we don’t.

“Its management is an asset to this merged entity and as far as broking is concerned, we need to have very strong hands on management, which is critical for the progress and success of the company,” he said.

On the legal case that Apex is currently involved in with 18 of its shareholders for allegedly acting in concert to obtain control of the company and breaching capital market rules, Azizan is optimistic that it would have a good case, as results from the EGM showed that shareholders were in favour of the proposed merger and private placement.

One of the 18 defendants is Lim Siew Kim (the daughter of the late patriarch of the Genting Group, Tan Sri Lim Goh Tong), who is said to be a substantial shareholder in Apex.

Azizan said Lim and the two companies linked to her - Pinerains Sdn Bhd and Cergas Megah (M) Sdn Bhd - applied to restrain the holding of the EGM for the merger.

“Just two days before the AGM and EGM today, there were major attempts in court to stop the EGM. The other was to stop a very major shareholder from voting. Concrete Parade Sdn Bhd put in a last moment application to disqualify ACE Investment from voting,” he added.

According to Bloomberg data, Lim personally holds a 2.79% stake in Apex while Pinerains and Cergas Megah hold 4.369% and 3.73%, respectively. Concrete Parade, on the other hand, owns 4.93%.

While Apex seems to have scraped through for the green light for the merger and private placement, the same cannot be said of its proposal to alter its existing memorandum and articles of association to substitute it with a new company constitution.

Although 55.4% of the shareholders voted in favour, this was insufficient for the resolution to be carried out as a minimum of 75% is required.

“We have until the end of the year to regularise our constitution, so we will be taking certain measures to ensure that it would be done with what is required.

“We didn’t expect for the motion not to be carried through because the contents of the constitution are very standard and necessitated by the law,” said Azizan, adding that Bursa Malaysia has requested all public-listed companies to adopt the new constitution by Dec 31 this year.

He also noted that there were no questions raised about it during the EGM and this took Apex by surprise when 44.6% of the shareholders voted against it.

“We don’t know why this block voted against it. We cannot identify and understand the reason why because there was nothing extraordinary in the amendments we suggested,” he said.

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Apex , Mercury , merger , shareholders , vote , high court ,


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