SBI Offshore&rsquo s former chairman and CEO Jonathan Hui Choon Ho is making another attempt to gain some control of the company&rsquo s board by calling for an extra-ordinary general meeting.

 

In a July 6 letter to the board, Hui, who owns 7.92% of the company, has teamed up with another shareholder Paul Goh Ju Poh, who claims to own 2.82%, to oust an existing director and appointment their nominee.

 

Under Singapore company laws, shareholders who hold more than 10% can call for EGMs.

Goh and Hui want to remove Ahmad Subri Bin Abdullah from the company&rsquo s board, as they believe that the KL-based independent director will not be as effective given the SBI Offshore&rsquo s business will be more Singapore-based. He was appointed to the board on Dec 10 2018.

 

They want to appoint one Percival Jeyapal s/o David, with some 50 years of experience in marine offshore and oil services, to the company&rsquo s board, instead. 

Hui left the company in late 2017 after an investigation by law firm UniLegal found the existence of two sets of conflicting agreements on the acquisition and subsequent disposal of a 35% stake in an entity called Jiangyin Neptune Marine Appliance.

 

In Jan 2018, Hui and a couple of other shareholders tried to call for an EGM so that three directors on the board then can be ousted and that Percival, another nominee, and Hui himself can be appointed to the board. 

 

Following subsequent &ldquo subsequent communications&rdquo with SGX RegCo, SBI Offshore&rsquo s board, by then headed by then executive chairman Mirzan Bin Mahathir, rebuffed the request, citing, among other issues, Hui&rsquo s previous involvement with the Jiangyin Neptune Marine Appliance deal.

 

In addition, while recognising Percival&rsquo s experience as an engineer, the SBI Offshore board then said he has no experience as a director of a listed company.

Hui' s move came barely a week after Mirzan was voted out by shareholders at the company&rsquo s annual general meeting on June 29. He is the son of former Malaysian prime minister Dr Mahathir Mohamad.

 

He was subsequently reappointed as the company&rsquo s interim CEO so that he can help see through an RTO deal already in motion.

 

According to the company in a filing to the stock exchange, 70.05% of the valid votes were against his reappointment, versus just 29.95% in favour.

 

Mirzan became a substantial shareholder of SBI Offshore back in Sept 2014 after buying 10.8% of the company via a private placement at 26.05 cents per share.

At the AGM, another director, James Kho Chung Wah, was re-elected. 

 

Ahmad Subri, who is targeted by Hui and Goh in their latest EGM requisition notice, wasn&rsquo t slated for re-election at the AGM.

 

On June 12, SGX RegCo said is looking into SBI Offshore for potential listing rule breaches as well as potential contravention of directors&rsquo fiduciary duties, following the release of a special audit by RSM Corporate Advisory.

 

The special audit was ordered by SGX RegCo back in December 2018, to probe the sale of a factory in China sold by SBI Offshore at just RMB18 million &ndash a significant discount off its book value of RMB38 and 40 million. 

 

The special audit, released by RSM on June 12, concluded that SBI Offshore did undertake an &ldquo adequate and reasonable&rdquo process to try and sell that factory. The transacted price of RMB 18 million represented the best offer they received during the period.

 

However, based on the RSM special audit, several other issues related to the same factory has arisen.

 

For one, when SBI Offshore bought the factory, the acquisition agreement did not contain sufficient details of the assets to be acquired.

 

No valuation was conducted prior to the execution of the acquisition agreement to assess and support the purchase consideration of RMB32 million.

CATALIST-LISTED SBI Offshore on Saturday reiterated reasons for why the nominating committee (NC) had decided to appoint Mirzan bin Mahathir as interim CEO, a mere three days after the annual general meeting where Mr Mirzan was not re-elected to the board.

 

These reasons include the fact that the company' s management had raised concerns to the NC on the abrupt cessation of the executive chairman, especially given that Mr Mirzan has been overall in charge of the company' s reverse takeover (RTO) of the Berlitz group of companies, and key professionals in the RTO have opined that his strategic input is " invaluable" to the continued RTO process.

 

The management thus believes that Mr Mirzan is instrumental in ensuring that the company is able to complete the outstanding matters relating to the RTO as well as to fulfill the company' s legal obligations in relation to the deal.

 

Furthermore, if Mr Mirzan leaves, there will only be four employees left at the firm. " The company will be adversely understaffed. As such, the management had recommended to the NC to reengage Mr Mirzan for two months up to the end of August 2020, and proposed a revised remuneration of S$12,000 per month, to commensurate his continued contribution mainly to the RTO matters," it said.

 

The NC, after considering the importance of the RTO to the company and its shareholders, and the need for adequate staffing with proper experience to ensure proper running of a listed company, coupled with the unlikelihood of finding a replacement CEO in a short time with similar experiences and up-to-date knowledge of the ongoing RTO, as well as willingness to be engaged on a very short-term basis, decided to allow Mr Mirzan' s appointment.

 

The RTO project is currently in an advanced stage, and Mr Mirzan has been deeply involved in leading commercial negotiations with the vendor and driving the transaction forward while SGX is assessing the pre-admission notification.

 

The company' s sponsor has no objection to the appointment of Mr Mirzan as the interim CEO.

 

Following the completion of the RTO, existing directors of the company will relinquish their positions as directors of the company. None of the company' s personnel or employees, including Mr Mirzan, have been identified as executive officers of the enlarged group, and there are no discussions on the retention of service of existing personnel of the company, including Mr Mirzan, post-RTO.

SINGAPORE (June 29): Mirzan Bin Mahathir, chairman of SBI Offshore, was voted out by shareholders at the company&rsquo s annual general meeting earlier today.

According to the company in a filing to the stock exchange, 70.05% of the valid votes were against his reappointment, versus just 29.95% in favour.

 

Mirzan became a substantial shareholder of SBI Offshore back in Sept 2014 after buying 10.8% of the company via a private placement at 26.05 cents per share.

 

He is the son of former Malaysian prime minister Dr Mahathir Mohamad.

 

At the AGM, another director, James Kho Chung Wah, was re-elected. 

 

Besides voting out Mirzan, shareholders shot down other a couple of other resolutions too. 

 

For example, 66.43% refused to approve directors&rsquo fees of $120,000 for the FY ending Dec 31 2020 to be paid on a quarterly basis in arrears. 

 

In addition, they would not allow the company the authority to issue shares, neither is the company allowed to issue shares as award for performance.

 

On June 12, SGX RegCo said is looking into SBI Offshore for potential listing rule breaches as well as potential contravention of directors&rsquo fiduciary duties, following the release of a special audit by RSM Corporate Advisory.

 

The special audit was ordered by SGX RegCo back in December 2018, to probe the sale of a factory in China sold by SBI Offshore at just RMB18 million &ndash a significant discount off its book value of RMB38 and 40 million. 

 

The special audit, released by RSM on June 12, concluded that SBI Offshore did undertake an &ldquo adequate and reasonable&rdquo process to try and sell that factory. The transacted price of RMB 18 million represented the best offer they received during the period.

 

However, based on the RSM special audit, several other issues related to the same factory has arisen.

 

For one, when SBI Offshore bought the factory, the acquisition agreement did not contain sufficient details of the assets to be acquired.

 

No valuation was conducted prior to the execution of the acquisition agreement to assess and support the purchase consideration of RMB32 million.

 

Prior to entering into the acquisition agreement for the purchase of the factory, the company had incurred RMB8.19 million for the construction and renovation of the factory even though SBI Offshore was intending to acquire a completed factory. 

 

Besides the purchase price of RMB32 million, SBI Offshore incurred capital expenditure of about RMB15 million up till 2013 for this factory. 

 

&ldquo The factory was eventually underutilized and accumulated losses of more than RMB 47 million for the period up to 31 December 2017,&rdquo said SGX RegCo.

 

Citing findings from the special audit, SGX RegCo will now commence detailed probes on the company.

A FORMER SBI Offshore executive who alleged that PricewaterhouseCoopers Advisory Services (PwC) had caused him reputational loss in its special audit of transactions he was involved in has lost his suit.

 

David Tan Woo Thian, the founder and former chief executive of SBI Offshore until 2016, had his claims dismissed by a High Court judge last Wednesday, according to the minute sheet seen by The Business Times.

 

In July 2016, SBI engaged PwC to review a series of transactions pertaining to SBI' s acquisition and subsequent disposal of shares in Jiangyin Neptune Marine Appliance (NPT), a Chinese lifeboat manufacturer.

 

PwC found that two sets of NPT acquisition agreements and disposal agreements existed, with conflicting sale and purchase prices. SBI' s prospectus reflected the acquisition cost of US$1.75 million, whereas a separate document lodged with the PRC authorities showed a consideration of US$350,000.

 

Mr Tan, together with another former CEO Jonathan Hui Choon Ho, had allegedly signed both sets of agreements on the company' s behalf. PwC' s findings were summarised in a report dated Sept 6, 2016 that was issued to SBI' s board and shareholders.

 

Mr Tan alleged that PwC acted negligently in investigating the transactions and in presenting its findings in the report, causing him to lose influence in SBI.

 

Justice See Kee Oon dismissed the claims, saying that PwC' s report drew fair and defensible conclusions. " The report correctly surfaced the discrepancies and inconsistencies in the acquisition and disposal documentation relating to the NPT transactions, and correctly drew attention to the possibility of breaches of Chinese tax laws and Singapore securities law," he said.

 

Mr Tan' s assertions were unsupported and entirely speculative, the judge added. " The plaintiff' s real grievance appears to be personal. The present action appears to be driven by his dissatisfaction over many things. Among these are the defendant' s perceived prejudice against him and its ostensible failure to hold John Chan to account in spite of the allegations raised by Jonathan Hui via email.

 

" This constitutes part of the plaintiff' s ' conspiracy' theory that the defendant sought to ensure that John Chan was absolved of blame and had set out to ' fix' the plaintiff instead. I am unable to see any proper basis for this theory. In any event, it is not part of the plaintiff' s pleaded case."

 

John Chan Lai Thong was another former CEO of SBI Offshore who left in August 2017.

 

Back in 2016, Mr Tan, SBI' s largest shareholder, had joined forces with Mr Hui to requisition an extraordinary general meeting in a failed bid to force out Mr Chan.

 

SBI' s board had called on shareholders to vote against the removal of Mr Chan, arguing that there was nothing adverse in the findings by PwC with respect to several allegations that were levelled against him.

 

The Court will hear the parties' submissions on costs later this month. Mr Tan was represented by Vijay & Co. PwC was represented by Rajah & Tann.

https://www.businesstimes.com.sg/companies-markets/court-dismisses-sbi-offshore-ex-ceos-claims-of-reputational-loss-against-pwc#:~:text=A%20FORMER%20SBI%20Offshore%20executive,in%20has%20lost%20his%20suit.