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Datapulse releases EGM circular, to report some findings from mandated independent review to SGX within a month
MAINBOARD-listed Datapulse Technology has released the circular for its upcoming extraordinary general meeting (EGM), amid a shareholder bid to oust the embattled disk drive maker's new board.
The meeting will be held at the Fuji Room of the Hengda Building in Cecil Street on April 20, at 2pm, the board announced on the Singapore Exchange (SGX) website on Monday afternoon.
There are 10 items on the agenda. Eight, requisitioned by shareholders, are to remove and replace board members.
The board tabled two resolutions of its own - one to approve a proposed business diversification into consumer products, and one to pay out a special dividend of one cent a share on gains from selling the company's manufacturing site in Tai Seng.
In one section of the circular - which clocked in at more than 150 pages in all - the board laid out its case for its December acquisition of Wayco Manufacturing, a Malaysian personal care product business.
Datapulse co-founder Ng Khim Guan's daughter, Ng Bie Tjin, called for the EGM to halt the proposed business diversification.
Datapulse has said that the Wayco deal will help the company "to secure better prospects" and avoid a potential delisting.
"The company intends to engage in the proposed new businesses incrementally; it will monitor developments and progress in the proposed new businesses and take necessary steps to identify and hire suitable candidates, both from within the company and externally, to manage and expand the proposed new businesses," it added.
The board also asserted: "Assuming the proposed business diversification is approved by shareholders at the EGM, the board is confident that the executive director and CEO, Mr Wilson Teng, will be able to spearhead the management and development of the hair care business under Wayco."
Mr Teng echoed, in a statement, the company's argument that Datapulse's financial performance has deteriorated for several years and that the media storage business is not sustainable.
"Datapulse needs to diversify and has selected Wayco as a profitable business which carries relatively low risk till at least the end of 2018 as we have the right to require the vendor to buy back Wayco at the same consideration if we discover any material adverse matters. With shareholder support to reject the removal of current directors, the board will evaluate strategic options to grow the Wayco business, taking into account a recent strategic review by Ernst & Young," he said.
The Hong Kong-based Mr Teng became chief executive on March 19 - a week-and-a-half's delay from his original start date - after his predecessor Kee Swee Ann's departure on Feb 2.
The board had said at the time of Mr Kee's resignation that it would consider the appointment of a permanent replacement "once there is more clarity on the future business direction and strategy" of the company.
"Although Mr Wilson Teng may not have direct experience in the hair care industry, Mr Wilson Teng has extensive sales management and strategy experience, cultivating and managing business and sales management teams that focused on addressing new markets," said the Datapulse circular.
The Wayco deal and the connections among various board members and parties involved have sparked scrutiny from shareholders and watchdogs alike.
The SGX has slapped Datapulse with a notice of compliance, ordering the company to hold an independent review of - among other issues - the facts and circumstances surrounding the board's approval for the Wayco acquisition and the company's processes around board appointment and nomination of directors by shareholders.
Law firm RHTLaw Taylor Wessing LLP was appointed to carry out this review on March 11 and "it is currently contemplated that RHT will report its findings" on the matters required under the notice of compliance within a month from its engagement, Datapulse said. RHT will report to both the company's audit committee and the bourse operator.
Besides Mr Teng, Ms Ng Bie Tjin's proposed voting items also seek to overthrow another set of recently appointed directors.
They joined after the arrival of a new controlling shareholder - accountant Ng Siew Hong, no relation to Ms Ng Bie Tjin.
Ms Ng Siew Hong and two of the four directors - Thomas Ng and Rainer Teo - have been described as "business acquaintances", while Mr Kee used to work for Ang Kong Meng, the vendor in the Wayco deal.
Meanwhile, director Low Beng Tin sold his shares to Ms Ng Siew Hong through intermediaries, which helped her to nab her controlling stake, although the company has said that Mr Low did not know her - and did not meet or speak to her - at the juncture and in the process of the sale.
Mr Teng was recruited after Mr Kee's resignation "through the introduction of an independent consultant and was not acquainted with Ms Ng Siew Hong prior to joining the company", the circular noted.
But the Datapulse directors said in Monday's circular: "The board would like to reiterate that there is a strong independent element on the board."
The board added in a separate joint statement: "We trust shareholders will support our focus on corporate recovery while maintaining the highest levels of corporate governance."
A shareholder dialogue, held in collaboration with the Securities Investors Association (Singapore), will take place on Monday evening.
Datapulse closed down by half a Singapore cent, or 1.35 per cent, to S$0.365, after the announcement.