KUALA LUMPUR: Fong Yit Meng, a minority shareholder of EKA Noodles Bhd, said he is seeking to requisition an extraordinary general meeting (EGM) as part of a plan to put the loss-making rice vermicelli and sago sticks maker back on a sustainable growth path.
Fong is one of the requisionists seeking shareholders’ nod to remove four key directors from the board and replace them with seven others at an EGM slated for Feb 6. The others are Law Chong Kai and Vibrant Class Sdn Bhd which owns an 8.97% stake — who together hold not less than 10% of EKA shares.
“The company has slipped into Practice Note 17 (PN17) status for some time now [since August last year], and there have been claims by employees that they are not being paid,” Fong told The Edge Financial Daily.
“When questioned, the board said it was not aware of this issue. So, a few of us felt that we had to do something to put the company back in proper perspective.
“We are of the view that there is still time to rescue (the company). We can’t hold back any more because the company [is producing] edible products,” he said.
Fong said the requisionists are also looking into a capital reduction and/or asset injection to wipe out the company’s accumulated loss as part of their plan to address the company’s PN17 status.
In an EGM circular to shareholders dated Dec 30, 2016, the requisitionists are seeking to remove EKA Noodles’ chairman Datuk Sohaimi Shahadan, executive director Ahmad Zaffry Sulaiman, its non-executive directors Yee Yit Yang and Raja Nazrin Raja Ghazilla, as well as any other person appointed director following its last annual general meeting on May 26, 2016.
Its group managing director and largest shareholder Datuk Seri Chin Seak Huat was not named in the list. He owned 10.67% of EKA shares as at March 31, 2016.
At the same time, they are seeking to appoint Chan Soo Yean and Fong Yit Meng as executive directors, and Khairilanuar Tun Abdul Rahman, Datuk Dr Chin Yew Sin, Leong Woay Hong@Neoh Woay Hong, Law Chong Kai and Lim Choo Hooi as non-executive directors.
Khairilanuar is also proposed for the role of chairman.
Meanwhile, Fong dismissed allegations of a boardroom tussle at EKA Noodles, saying the existing board members had committed no wrongdoing.
“There is no ill intent. We just want to assist the company in getting out of its current state,” he said.
“We are not removing the managing director. In fact, some of the board members are well-respected,” said Fong.
EKA Noodles had on Jan 3 announced that the board will convene a board meeting to discuss and contemplate whether the intended EGM on Feb 6 is legal.
“We shall wait for the outcome of the board meeting, the date of which will be announced soon,” Fong added.
When contacted, EKA Noodles declined to comment.
EKA Noodles fell into PN17 status on Sept 1 last year as its shareholders’ equity on a consolidated basis was 25% or less than its issued capital.
The Penang-based company has been loss-making since the quarter ended Sept 30, 2013, on lower sales and higher operating costs.
According to its latest quarterly result for the period ended Sept 30, 2016, EKA Noodles’ accumulated losses climbed to RM66.47 million from RM51.94 million as at Dec 31, 2015.
In its third quarter ended Sept 30, 2016, its net loss widened to RM5.9 million from RM1.65 million a year ago, while its revenue dropped by half to RM6.33 million from RM12.73 million
As at Sept 30, 2016, its short-term and long-term borrowings stood at RM68.53 million, while cash and cash equivalents was RM2.12 million.
EKA shares closed unchanged at 7.5 sen last Friday, giving it a market capitalisation of RM23.4 million. The stock has fallen 42.3% over the past year.