You are here

Oxley chiefs appeal for board seat at United Engineers AGM

THE Oxley duo made a surprise appearance at the annual shareholder meeting of United Engineers (UE) on Thursday, where they appealed for a director's seat on the board recently instated by the chiefs of Perennial Real Estate and Yanlord Land.

Oxley became a substantial shareholder in UE last August, after the Yanlord Perennial consortium bought a 33.5 per cent stake in the company (now 34.87 per cent). Oxley owns 16.56 per cent of UE.

It was not part of the meeting agenda, but Oxley Holdings chairman and chief executive Ching Chiat Kwong addressed the board at UE Convention Centre nonetheless. Citing Oxley's extensive real estate experience, he asked the board to reconsider his application, which was rejected the last time.

UE lead independent director Teo Ser Luck said it was not fair for him to go into the details of the rejection, as it was "not about Mr Ching". Diversity of skills and backgrounds was considered in the board composition, he said, and the nominating committee would consider Mr Ching's appeal again.

Market voices on:

Pua Seck Guan, CEO of Perennial and non-executive director of UE, was less warm to the suggestion. He said: "Mr Ching ... I presume when you acquired the shares, you liked the company and you liked the board. And I guess that wasn't the condition of your purchase right? To be on the board."

Mr Ching replied: "I bought the UE shares definitely looking at the assets and the composition of UE ... the second fundamental and most important reason I bought the shares was that I thought I always had the chance to be on the board of UE. That's all."

At the meeting, the board also sought votes to approve a new share issue mandate. UE has not issued new shares in years. The company was in divestment mode under the charge of the OCBC family.

Oxley deputy CEO Eric Low, who owns 1.06 per cent of UE, noted that UE currently trades at a sharp discount to its net tangible asset value per share of S$3.09. Meanwhile, UE's net debt-to-equity ratio is 0.23 times. UE has said it is comfortable with a ratio of 1.1 times.

"If the company needs any money, we think that we should look at gearing up rather than doing a share placement so that it is not dilutive to shareholders," Mr Low said.

He also suggested that UE do a rights issue instead of a placement, if it wished to stay conservative.

"And let's say you're afraid some people won't subscribe, Oxley will underwrite the whole issue. We hope that board members can consult us. We are more than willing to work with management to make sure that the company keeps growing," Mr Low said to applause.

Mr Pua reiterated that it was normal for the board to ask for a share issue mandate, "the same as any public company".

He added: "It does not mean that you have (a substantial stake), management will have to consult you for every single thing."

Separately, the board shared more about its immediate growth plans. It plans to spruce up UE BizHub CITY, formerly UE Square, to raise the efficiency of its net lettable area.

UE group managing director Roy Tan said: "We are also looking at converting the serviced apartments to a hotel, and have started discussions with the relevant authorities."

UE BizHub WEST had also been flagged for possible redevelopment, but it may be better to carry on operations for now, Mr Tan said.

All resolutions were passed with Oxley voting in favour. Mr Ching and Mr Low shook hands with the board after the meeting.

UE shares rose one cent or 0.38 per cent to S$2.67 on Thursday.