Air-conditioning specialist Natural Cool Holdings' board has drawn more flak from shareholders just days before Monday's vote on whether to oust chairman Joseph Ang.
This time, two new shareholders - Mr Ong Mun Wah and Ms Edi Ng, who together claim to own over 10 per cent of Natural Cool stock - want to revoke the shareholders' mandate given to directors in April to allot and issue new stock.
Mr Ong and Ms Ng wrote in a letter to shareholders on Dec 6: "We gave the general mandate to the directors in the belief that they would only exercise it in honesty and good faith to raise capital when needed. Recent events, however, have made us doubt whether the general mandate is being used for the benefit of Natural Cool and its shareholders."
They questioned the board's decision to issue 27 million new shares to Mr Ng Quek Peng, who it intended to recruit as an "executive officer", at a discounted issue price of 6.5 cents. Mr Ng has emerged as the single largest shareholder in Natural Cool as a result of the placement.
The circumstances surrounding the placement also "warrant some suspicion", noted Mr Ong and Ms Ng. Some directors had approved the placement on Oct 20, just days after another substantial shareholder, Mr Lim Teck Chuan, sent a requisition notice to the company to convene an extraordinary meeting to remove the chairman, Mr Ang, in order to refresh the board. That meeting is scheduled for Monday.
The placement shares will have an impact on Monday's vote, and "we are also given to understand that Mr Ng has refused to abstain from voting", Mr Ong and Ms Ng said.
They also expressed concern that the board did not seem to have a clear reason for the placement: "The directors seem to suggest that the placement has something to do with their decision to sell Natural Cool's shares in HMK Energy.
"If this is so, then Natural Cool will soon be in receipt of additional funds, which reinforces the point that Natural Cool does not need the proceeds from the placement."
The shareholders were equally sceptical about the arrangement with Mr Ng: "It is quite extraordinary that the directors were prepared to give Mr Ng the benefit of the placement at such a good price before he is employed and even before his performance can be assessed, and especially when the placement has now made him the largest shareholder of Natural Cool."
They noted that the issue price of 6.5 cents offered to Mr Ng was lower than the cash-per-share of 6.8 cents before placement, based on the company's cash balance of $15.1 million before the placement. "It is confusing to us as shareholders that the directors proceeded with the placement... at a discount to cash-per-share, with no specific immediate use of the proceeds."
Mr Ong and Ms Ng have requisitioned an extraordinary meeting, scheduled for Dec 22, where shareholders will vote on whether to revoke the general share issue mandate. The shares last traded at 9.5 cents before a trading halt was called yesterday morning, pending the release of an announcement.