Natural Cool tussle: SGX approves share placement

Shareholders of Natural Cool (top) plan to oust chairman Joseph Ang (above) to refresh the board and improve efficiency.
Shareholders of Natural Cool (above) plan to oust chairman Joseph Ang to refresh the board and improve efficiency.PHOTO: COURTESY OF NATURAL COOL HOLDINGS
Shareholders of Natural Cool (top) plan to oust chairman Joseph Ang (above) to refresh the board and improve efficiency.
Shareholders of Natural Cool plan to oust chairman Joseph Ang (above) to refresh the board and improve efficiency.PHOTO: COURTESY OF NATURAL COOL HOLDINGS

It will put chunk of firm's capital with investor suggested by chairman under fire

The boardroom tussle at Natural Cool Holdings has taken a new twist after the Singapore Exchange approved a hefty share placement.

This placement will put 10.8 per cent of the firm's enlarged share capital into the hands of a "strategic investor" recommended by chairman Joseph Ang, ahead of a decisive shareholder vote to oust him.

The move got the green light despite an application by chief executive Tsng Joo Peng and substantial shareholder Lim Teck Chuan for an injunction to stop the placement, which will be heard in court next week. The grounds for the injunction were not disclosed, but various aspects of the share placement raise questions about whether the Natural Cool board may be resisting change at shareholders' expense.

The share placement was announced the same day Natural Cool made known that it had, six days earlier, received a notice from Mr Lim, a 10.7 per cent shareholder, to requisition an extraordinary general meeting with a view to removing the chairman, Mr Ang, in order to refresh the board and "improve operational efficiency".

Mr Ang had headed the group's switchgear business and continued to draw at least $1.25 million in remuneration even after that business was sold off last year.

The board of directors also took the unusual step of issuing the new shares to a "strategic investor", Mr Ng Quek Peng, whom they intended to hire as an executive officer, before his employment was approved by the nominating committee. The move would align this investor's interests with the company, the board said in a statement last month.

Asked by The Straits Times to clarify why the shares had to be placed out before a formal employment contract had been signed, Mr Ang declined to comment. He also declined to clarify why the shares were not being negotiated as part of a formal performance share plan.

Some shareholders have also raised concerns about the fairness of the share issue price.

The new shares were issued at 6.5 cents, a discount of at least 7 per cent to the trading price of seven cents in the days before the placement agreement was inked.

The board said the proceeds of $1.7 million would be used to expand the group's air-conditioning and paint businesses, but the dilution comes even as Natural Cool sits on $31.6 million in cash and equivalents as at June 30,without expressing an urgent need for more.

Shareholder and National University of Singapore business school associate professor Mak Yuen Teen said: "There is no apparent need to raise cash and the timing is questionable."

He also flagged that Natural Cool's independent directors were given gratuities equivalent to three years of annual fees at the last annual general meeting - "highly unusual, given that they were already paid fees and certainly highly questionable in the light of certain transactions".

These involve the acquisition of Loh & Sons Paint last September and the deal to sell it to Mr Ang and his brother less than eight months later, which was eventually aborted.

As things stand now, the extraordinary general meeting scheduled for Dec 12 may not even proceed, as the company plans to challenge the validity of the resolutions in court.

Mr Lim and Mr Tsng could not be reached for comment. Mr Lim is also chairman and chief executive of Choo Chiang Holdings, which sells electrical products and accessories. He raised his stake in Natural Cool in May by exercising a convertible bond at a conversion price of 15 cents a share.

The counter was unchanged at 6.5 cents yesterday after falling one cent or 13.33 per cent on Thursday.

A version of this article appeared in the print edition of The Straits Times on November 26, 2016, with the headline 'Natural Cool tussle: SGX approves share placement'. Print Edition | Subscribe