An exit offer would enable troubled semiconductor firm Asti Holdings to delist from the Singapore Exchange&rsquo s mainboard. 

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&rsquo 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&rsquo 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&rsquo s auditors disagreed with the valuation because EocCell was an early-stage start-up that had yet to generate any income.

 

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

 

The updates are the latest in a long and drawn-out process to improve Asti&rsquo s financial and share price performance, but which has turned out to be a corporate governance disaster, resulting in further los

A top concern is the company&rsquo 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&rsquo 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 &ndash 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&rsquo 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&rsquo 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&rsquo 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&rsquo 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&rsquo 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: &ldquo 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.&rdquo

 

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&rsquo s. He added that he has been in talks with other potential buyers to make an exit offer for Asti.

 

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

 

&ldquo We are keen to make an exit offer once we have a clearer picture of the company&rsquo s financials,&rdquo 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.

 

&ldquo 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?&rdquo

 

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

 

&ldquo 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,&rdquo 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.

 

&ldquo 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.&rdquo

 

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: &ldquo 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.&rdquo

ASTI Holdings said a new valuer is &ldquo working closely&rdquo with its auditors to determine the valuation of its associate EoCell, in order to finalise the group&rsquo s audit for FY2021 and hold an overdue annual general meeting (AGM).

 

This would allow the completion of Asti&rsquo s FY2022 audit by Sep 30 this year &ndash which would in turn &ldquo significantly contribute towards facilitating and expediting a potential exit offer&rdquo , said the watch-listed semiconductor company in response to queries from the Securities Investors Association (Singapore) (Sias).

 

&ldquo An exit offer presents the best available option for shareholders as Asti has been directed by the SGX (Singapore Exchange) to delist, with no further avenues for extension,&rdquo said the company on Thursday (Jun 1).

 

Asti said that while it has received a non-binding letter of intent for an exit offer from a consortium, the company has &ldquo no control of this offer, which is subject to prior regulatory approval from the relevant regulators&rdquo .

 

Addressing Sias&rsquo queries on the recent appointment of Charlie Jangvijitkul to Asti&rsquo s board as an independent director, the company maintained that it deemed Jangvijitkul suitable after reviewing his credentials as well as conducting an interview and subsequent checks.

 

&ldquo In particular, the nominating committee also assessed that his prior work experience from 2001 to 2017 as a director and managing director of a company listed on the Stock Exchange of Thailand, TCM Corporation, would be valuable and can contribute to (Asti),&rdquo it added.

 

The company also revealed that the planned sale of shares by its former chief executive Michael Loh has yet to be completed, as it remains subject to the approval of SGX.

 

&ldquo ... Loh was retrenched as an employee on Dec 31, 2021, as part of a major restructuring to achieve profitability. On Feb 23, 2023, he relinquished all his roles on the board of directors by resigning as non-executive chairman and non-executive director of the company. In view of these developments... Loh has ceased to have any influence, direct or indirect, in the affairs of the board or the company,&rdquo said Asti, responding to Sias&rsquo question on the role of Loh in the company.

 

Separately, Asti issued a response to a May 10 letter from a shareholder who was &ldquo frustrated&rdquo by the delays in Asti holding its AGMs for FY2021 and FY2022. The company reiterated its responses to Sias to address several concerns outlined by the shareholder, including the delays in holding its AGMs.(*see amendment note)

 

The company also said it sent a May 22 letter to Ng Yew Nam, who is among the shareholders requisitioning to remove some of the directors of the company and appoint new ones, requesting Ng to respond by May 29.

 

This was to &ldquo enquire on certain pertinent matters&rdquo and seek Ng&rsquo s &ldquo feedback as well as to afford him the opportunity to dispel any point he may consider to be necessary&rdquo , s5aid Asti, adding that it has yet to receive a response.

 

In Asti&rsquo s view, &ldquo serious questions arise and doubts are cast&rdquo on a number of aspects of Ng&rsquo s claims made in his request for an extraordinary general meeting (EGM) to have five proposed candidates &ndash including himself &ndash to be elected directors of the company.

 

The company also questioned Ng&rsquo s credentials to be appointed as a director of its board.

 

&ldquo It is clear to the board that, by his refusal or failure or neglect to respond to the matters and queries raised by the board, ... Ng Yew Nam &ndash despite himself having asked for and expected the board to be transparent and as cooperative as possible with him and the other requisitioning shareholders &ndash is himself not transparent with regard to his intentions, and is not prepared to proceed in a cooperative manner with the board.&rdquo

 

THE potential offeror for ASTI has been identified as Prospera Alliance, a consortium comprising Thailand-listed Capital Engineering Network Public Company (CEN) and substantial shareholder Heah Theare Haw.

 

In an update on Tuesday (May 30), the semiconductor company announced that the Prospera Alliance has submitted an application to the Securities Industry Council (SIC) for the potential offer. The offer is subject to approval from the SIC.

 

CEN is a company listed on the Stock Exchange of Thailand, and is in involved in energy, engineering and construction materials businesses. Its major shareholders are members of the Leenabanchong family.

 

After failing to exit the Singapore Exchange watch list by Jun 5, 2022 and its attempts to extend the deadline rejected, ASTI&rsquo s shares has been suspended since Jul 5, 2022.

 

&ldquo As ASTI has been directed to delist, the priority of the board of directors is to secure a fair and reasonable exit offer for shareholders. Such an exit offer has to first fulfil all the necessary regulatory approvals,&rdquo said the company.

 

WATCH-LISTED semiconductor company Asti : 575 0% has received an unsolicited, non-binding letter of intent (LOI) for the acquisition of all the company&rsquo s shares.

 

In a bourse filing on Sunday (May 14) evening, the group said a consortium of two unnamed parties has &ldquo genuine interest&rdquo in making a potential pre-conditional voluntary general cash offer for all the ordinary shares in Asti&rsquo s capital. Discussions are currently underway. 

 

Still, Asti highlighted that &ldquo no definitive agreements&rdquo have been made and there is &ldquo no certainty&rdquo that the LOI will be executed.

 

&ldquo In the meantime, shareholders are advised to exercise caution when dealing in their shares,&rdquo it said. 

SGX is directing ASTI to convene its FY2021 and FY2022 AGM by Jul 31, 2023.

THE Singapore Exchange (SGX) has issued a notice of compliance to ASTI Holdings to convene its annual general meeting (AGM).

 

The last AGM was held on May 31, 2021 for FY2020.

 

The company had been given an extension to hold the FY2021 AGM by Sep 7, 2022. It said the external auditor could only give its opinion for FY2021 by Aug 18, 2022.

 

ASTI, whose shares have been suspended from trading since July 2022, has not held an AGM for FY2021 or FY2022 as at Apr 27, 2023.

 

The company had also failed to apply for an extension to convene the AGM for FY2022.

 

SGX said ASTI is in breach of Rule 707(1) of the mainboard rules, having failed to hold its AGM within four months of the end of the financial year. The exchange added that the AGM is a necessary forum for shareholders to get clarity on the company&rsquo s state of affairs and future plans in view of the trading suspension.

 

ASTI is currently locked in a battle with a group of shareholders who have requisitioned an extraordinary general meeting to remove directors and replace them with themselves. The company has fended off these efforts, claiming that the board overhaul could be disruptive and counter-productive to an exit offer.

 

SGX noted the company&rsquo s constitution provides for the fact that the directors are subject to periodic retirement and re-election. There are three directors, Ahmad Rasidi Bin Hazizi, Anthony Loh and Theerachai Leenabanchong who have not stood for re-election since their appointment after the last AGM.

 

SGX is requiring ASTI to convene its FY2021 and FY2022 AGM by Jul 31, 2023. The AGMs are to be minimally held in a physical location in Singapore for the board to address questions from shareholders before voting on resolutions.

 

Failure to comply with the requirements will be deemed a breach of mainboard rules.

 

WATCH-LISTED semiconductor company Asti said on Thursday (Apr 20) that a proposed extraordinary general meeting (EGM) by its shareholders &ndash Ng Yew Nam, Lim Chee San, Toh Cheng Hai and Ng Kok Hian &ndash would be invalid.

 

The company urged shareholders not to attend the EGM, and that even if any resolutions were to be passed, they would be deemed invalid.

 

Asti said this is because the requisitioning shareholders did not despatch printed copies of the EGM&rsquo s notice at least 21 days before May 5 &ndash the day the EGM is due to be convened.

 

It added that it obtained &ldquo written confirmation&rdquo from the requisitioning members&rsquo lawyers that as of Apr 17, no such printed copies of the notice had been distributed to shareholders.

 

Given that the proposed EGM had not been properly called for, Asti&rsquo s board of directors deemed the proposed meeting as invalid.

 

This follows the company&rsquo s announcement on Apr 4 that it was aware of a group of shareholders &ndash who collectively held at least 10 per cent of Asti&rsquo s shares &ndash calling for an EGM to remove some directors of the company and appoint new ones.

 

The requisitioning shareholders sought to remove Kriengsak Chareonwongsak, Ahmad, Rasidi Bin Hazizi, Sri Mohd Sopiyan B Mohd Rashdi and Anthony Loh, who are currently directors of Asti. In turn, they intend to elect five new directors onto the board, including Ng Yew Nam, Soh Pock Kheng, Sho Kian Hin, Chow Wai San and Yap Alvin Tsok Sein, at the EGM.

 

The meeting was scheduled for 10 am on May 5.

 

Asti Holdings 575 0.00%   announced earnings of $4.8 million for FY2022 ended Dec 31, 2022, a reversal from the loss of $3.9 million it recorded in the same period a year ago.

 

This comes on the back of revenue gaining 23.4% y-o-y to $67.0 million from $54.3 million last year. This is mainly due to higher revenue from the group&rsquo s tape & reel packaging services contributed by Philippines operations.

 

Gross profit margin dropped by 1 percentage point (ppt) 28% from 29% last year.

 

Overall expenses also saw a decline, with administrative expenses dropping 33.2% y-o-y to $11.0 million and other expenses declining by 95.4% y-o-y to $182,000.

 

As at end-December, cash and cash equivalents stood at $25.9 million.

 

With the group churning earnings this year, it has declared a dividend of 0.45 cent per share, compared to none in the same period a year ago.

 

See also: Kingsmen Creatives reports earnings surge of $4.6 mil for FY2022 after ' strong' 2HFY2022 performance

 

To recap, the group has been on the Singapore Exchange (SGX) watch list since June 6, 2019. It had said it will be delisted from SGX after failing to meet the requirements for exiting the watch list.

 

Asti Holdings, which is on the watch list of the SGX-ST, announced on June 6, that it will be delisted from the SGX after failing to meet requirements for exiting the watch list.

 

Semiconductor manufacturing services company Asti Holdings, on Dec 16, announced the termination of the proposed disposals of its subsidiaries, Micro View Technologies and EoPlex.

 

The termination was due to certain conditions that had not been fulfilled as at Dec 16. As a result, the company and the purchasers of both subsidiaries had mutually agreed not to proceed with the disposals.

 

The company had entered into two separate sale and purchase agreements (SPAs) with their subsidiaries&rsquo respective purchasers on Nov 3, 2021, and Dec 18, 2021.

 

The SPA for Micro View Technologies was entered into with Roslan Bin Affandi, who would have purchased the entire stake of Micro View Technologies amounting to 2.5 million shares at a nominal consideration of $1.

 

Roslan was previously the vice president of Eoplex Group & Telford Malaysia&rsquo s operations department. He had left the group on Sept 30, 2021.

 

The SPA for EoPlex was entered into with Instern, where the latter would have purchased an 85% stake amounting to 300 million shares, again at a nominal consideration of $1.

 

Instern is wholly-owned by Roslan.

 

According to Asti Holdings, both Micro View Technologies and EoPlex were not generating revenue, as at the time of their proposed disposals.

 

Asti Holdings, which is on the watch list of the SGX-ST, announced on June 6, that it will be delisted from the SGX after failing to meet the requirements for exiting the watch list.

 

The company has been on the list since June 6, 2019.

 

Trading of the company&rsquo s shares have been suspended since July 5 until the completion of the exit offer.