Asti reveals more details on potential offer for firm; long-delayed AGM to proceed in July

SINGAPORE - In response to mounting pressure from regulators and shareholders, watch-listed Asti Holdings last week revealed further details of a consortium that has expressed interest in buying out its shareholders, although an offer price has not been announced.

An exit offer, should it materialise, would enable the troubled semiconductor firm to delist from the Singapore Exchange’s (SGX) mainboard and provide a way out for shareholders who have been unable to carry out any trades since the shares were suspended in July 2022.

The consortium comprises Capital Engineering Network (CEN), an investment holding company listed on the Stock Exchange of Thailand, and substantial shareholder Heah Theare Haw, who is a Malaysian citizen.

Asti also revealed last Thursday that it had appointed a second valuer to finalise the valuation of a lithium-ion battery start-up called EoCell, in which it has an indirect stake through a subsidiary.

Asti’s acting chief executive Anthony Loh told The Straits Times that EoCell had previously been an acquisition target valued at US$350 million (S$473 million), but Asti’s auditors disagreed with the valuation because EoCell was an early-stage start-up that had yet to generate any income.

The start-up’s valuation process has so far taken more than two years, and delayed the audit of Asti’s accounts for the financial years 2021 and 2022.

The updates are the latest in a long and drawn-out process to improve Asti’s financial and share price performance, but which has turned out to be a corporate governance disaster, resulting in further losses for minority shareholders.

A top concern is the company’s failure to hold its annual general meetings (AGMs) for the past two years. AGMs are an important avenue for issuers to present their financial performance to shareholders and address their concerns. Shareholders can also vote on key corporate matters like appointing or re-electing directors.

Asti last held an AGM in May 2021 for the 2020 financial year (FY). It breached an SGX deadline to hold its AGM for FY2021 and has yet to convene an AGM for FY2022. SGX had ordered the company to hold its AGMs for FY2021 and FY2022 by July 31.

Mr Loh said that the company should soon be able to finalise EoCell’s valuation and close its FY2021 accounts, which will enable it to proceed with holding the FY2021 AGM as soon as July 31.

But another pressing issue remains – the absence of a confirmed exit offer for the company.

Asti was served a notification of delisting on June 6, 2022, which meant the company or its controlling shareholder must come up with a fair and reasonable exit offer, made in cash, to shareholders.

At the time, the controlling shareholder was Asti chairman and chief executive Michael Loh (not related to Mr Anthony Loh).

Mr Michael Loh has not made an offer for Asti, though in February he transferred 130.2 million Asti shares comprising his entire 19.89 per cent stake in the company to CEN in exchange for 80 million CEN shares worth some $8.5 million.

The move is still pending approval from the SGX. If it does get the nod, CEN would have paid around 6.6 cents per Asti share, representing a hefty premium over the shares’ last traded price of 1.4 cents on July 5, 2022.

This could set a benchmark for the minimum price required for future voluntary offers, if they are made within six months of the former CEO’s share transfer to CEN, according to the Singapore Code on Takeovers and Mergers.

Mr Michael Loh has since resigned from the board of directors and reportedly no longer has influence over Asti’s affairs.

Asti manufactures machines that assemble and package the components on printed circuit boards for the semiconductor industry. It was placed on the SGX watch list in June 2019 after recording pre-tax losses for three consecutive years.

The company’s poor performance over the years was partly due to cost overruns incurred by its 41 per cent-owned subsidiary, mainboard-listed component distributor Dragon Group International (DGI), after DGI ventured into the entertainment business. DGI, which owns a 40 per cent stake in EoCell, has been suspended from trading since 2018.

Asti also has a 26 per cent stake in Catalist-listed backend equipment maker Advanced Systems Automation and fully owns Telford, an unlisted company that programs chips.

In May 2023, several shareholders attempted but failed to convene an extraordinary general meeting (EGM) to replace Asti’s current board of directors. According to Asti, the requisitioning shareholders did not dispatch the proper notices for the EGM to shareholders on time, rendering the move invalid.

Mr Eddie Ng Yew Nam, a former employee of Asti who claims to have invested around $500,000 for an 11 per cent stake in Asti, led the requisition process.

He also runs his own firm providing chip inspection services in China and Singapore called iTrue Technologies, which was incorporated here in 2005 as Meyfort Services.

Mr Ng told ST: “I have been a shareholder of Asti for many years and know many of its top management. I am confident that the company can prosper if it is managed right, as there is consistent demand for the services we provide.”

Mr Ng, who wishes to be elected as a director of a new Asti board, revealed that he is interested in making an offer for the company because its businesses are complementary to iTrue’s. He added that he has been in talks with other potential buyers to make an exit offer for Asti.

“There are interested buyers, but when they see that we are not in control of the board and that the company’s accounts are not in order, it is very difficult to continue negotiations. This was my purpose for wanting to requisition an EGM,” he said.

“We are keen to make an exit offer once we have a clearer picture of the company’s financials,” Mr Ng added.

When asked why the board had not been more cooperative with the requisitioning shareholders, Mr Anthony Loh said the current board believes the best option for shareholders is to nail down an exit offer as soon as possible.

“Changing boards now would be very disruptive because we have been negotiating with CEN for an exit offer. Would it want to buy a company whose entire management has been replaced?”

He added that attempts to obtain additional details on how the new board of directors could better contribute to the company’s performance and manage the exit offer process, among others, were unsuccessful.

“The requisitioners also did not provide a plan to overhaul the company and did not provide information on whether they would make an exit offer. They were not transparent about their intentions,” Mr Anthony Loh said.

He also pointed out that for FY2022, Asti delivered a profit of $3 million and its current board announced an interim dividend of 0.45 cents per share, the first payout in 10 years.

Corporate governance advocate and professor at the National University of Singapore Business School, Professor Mak Yuen Teen, said he is not convinced that the offer from CEN and Mr Heah is confirmed for now.

“The company seems to be releasing information on the offer in dribs and drabs. Minority shareholders should still be sceptical about an offer materialising at this point, as this could just be an attempt to sway them from voting for a new board.”

Prof Mak said regulators should ensure that Asti holds its AGM by July 31 and that shareholders should not be swayed from voting in a new board.

He pointed out that several directors are up for re-election, while others had been appointed without a vote by the shareholders.

A new board would also be able to look into several questionable moves made under the current board, such as paying out overly high remuneration packages to Mr Michael Loh when the company was struggling financially.

Prof Mak added: “If the exit offer is genuine, it should not matter to the parties making the offer whether there is a change to the board of directors or not.”