Hwa Hong sets out views of non-independent non-executive director Huang Yuan Chiang

THE board of Hwa Hong has set out the views of non-independent non-executive director, Huang Yuan Chiang, following a dispute over the appointment of a financial advisor and statements made to the media about the events of the company’s annual general meeting.

Executive director Ong Eng Loke, non-executive non-independent director David Ong and non-executive non-independent director Ong Eng Keong (known collectively as the Ong directors), made a bourse filing after market close on Wednesday (May 25) about their differences with Huang — differences which led to Huang refusing to sign off on a May 20 statement to the media.

On the appointment of financial advisor Evercore Asia, Huang had said that he was not involved in the appointment of the financial advisor, and so was unable to form an opinion on whether Evercore Asia would be able to help maximise shareholder value. Huang also said he was not privy to the terms of appointment, scope of work, terms of remuneration and whether there were any past dealings with the Ong directors that would make Evercore Asia unsuited for the job of advising shareholders.

The Ong directors said they disagreed with this, claiming that the board had been deliberating the appointment before the May 17 announcement, and that proposals from Evercore Asia had been circulated to the board (including Huang) in April, ahead of the May 13 meeting to consider the proposals. The directors met on May 13 to discuss the appointment of Evercore Asia to solicit other potential offers following the Sanjuro United offer to take Hwa Hong private; they also had a telephone conversation with Huang about the matter.

Huang was of the view that the appointment was a rare and unnecessary step, in view of the specific obligation under The Singapore Code on Take-overs and Mergers to appoint an independent financial advisor. His concern was that there might be a conflict of views between Evercore Asia and the independent financial advisor, and so objected to the appointment of Evercore Asia.

The directors said: “The current Ong directors note, however, that the code provides that a target company is not prohibited from soliciting potential competing offers in the interests of shareholders, and that such solicitation does not amount to actions which frustrate the original offer.”

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Huang had also disagreed with the media statement that the current matters at hand were a result of multiple factors stemming from the recent annual general meeting, including the resignation of the former acting managing director. He had also said he did not see the connection between the current matters and the resignation of the former acting managing director.

Huang had taken issue with two points in the statement, which said: “Nonetheless, the Current Ong directors are confident in the intrinsic value of the Company and are committed to protecting the interest of shareholders, including all minority shareholders.”

First, he said, the statement suggested that the former acting managing director was not committed to protecting the interests of shareholders, while the Ong directors were. But Huang said he is unable to verify this statement.

Second, he said, the statement does not add to shareholders’ understanding of the intrinsic value of Hwa Hong. He believes that it suggests that the former acting managing director might not be confident of the intrinsic value of the company, although he is unable to verify that suggestion.

The directors’ statement follows the Securities Investors Association (Singapore) call for Hwa Hong’s incoming independent directors to “step aside” until the independent review is done.