Aztech gets mandate to delist from SGX

Aztech Group chief executive Michael Mun, who has made a privatisation offer for the firm, was not at yesterday's meeting.
Aztech Group chief executive Michael Mun, who has made a privatisation offer for the firm, was not at yesterday's meeting.

Directors grilled at meet with investors, who must now decide whether to accept exit offer

Feelings ran high yesterday at what is likely the last investor meeting to be held by Aztech Group, the target of a not-so-sweet privatisation offer from chairman and chief executive Michael Mun.

At least 70 people packed the room at Aqueen Hotel Paya Lebar, where a number of long-suffering shareholders grilled the independent directors for an hour about the fairness of the offer. Mr Mun is offering 42 cents a share.

Aztech stock has plunged from above $1 a share in May 2015, after the management undertook a 10- for-one share consolidation and capital reduction exercise, to 32.5 cents on the day before the offer was made.

Aztech, which began as an electronics firm, swung into losses in the third quarter of 2015 after diversifying into various unrelated businesses over the years. In 2014, it acquired the recipe and premises of Kay Lee Roast Meat Joint for $4 million.

Mr Mun and his son Jeremy Mun, who is an executive director of Aztech, did not attend yesterday's meeting.

Nevertheless, they got the mandate they needed to delist the company. Of the total number of shares cast in the vote by shareholders yesterday, 93.8 per cent were in favour of a delisting. The total number of shares in favour accounted for 37.9 per cent of Aztech's total share capital. The Muns and parties in concert with them own at least 29.8 per cent of Aztech.

The meeting got off to a fractious start when no explanation was given for the Muns' absence.

When questioned, company secretary Pavani Nagarajah said: "Mr Mun is an interested party of the offerer. He's taken the approach that because it is a conflict of interest, it's best that the independent directors chair the meeting and handle any queries from shareholders."

Some investors expressed dismay that the Muns were absent as they could have addressed shareholders while letting the lead independent director chair the meeting instead.

Another shareholder questioned the independent directors' reasons for supporting the Muns' offer.

He felt that liquidating the company may give him more value, since Aztech had a net asset value per share and a net tangible assets per share of 95.2 cents as of June 30.

Lead independent director Philip Tan said of the offer: "If I had said no and it (the share price) goes down right to the bottom, I'll be blamed. Prices go two ways. You have to take a card. I'm not a magician. I don't predict, I'm not sure about the future."

Shareholders must now decide whether to accept the 42-cent exit offer, which closes at 5.30pm on Jan 23. If the Muns cannot secure more than 50 per cent of issued shares by the close of Jan 23, the delisting will not proceed and Aztech will remain listed on the Singapore Exchange (SGX). If they can cross the 50 per cent threshold by then, the delisting will proceed and shareholders will be stuck with illiquid shares, although the offer could be extended beyond the closure date.

The counter closed up half a cent at 41.5 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on January 07, 2017, with the headline 'Aztech gets mandate to delist from SGX'. Print Edition | Subscribe