This article first appeared in The Edge Financial Daily on June 20, 2019
KAJANG: Shareholders of Apex Equity Holdings Bhd have given their approval for the proposed merger between its wholly-owned unit JF Apex Securities Bhd and Mercury Securities Sdn Bhd, despite an earlier condition by the Securities Commission (SC) that its largest shareholder ACE Investment Bank Ltd exits Apex.
ACE has a 25.01% stake in Apex, but when the SC approved the proposed RM140 million merger, it had specifically stipulated that ACE must exit Apex and dispose of its entire shareholdings within six months of the merger completion date.
Asked on the progress of ACE’s shareholding, Apex non-independent non-executive director Datuk Azizan Abd Rahman said Apex would not know as the conditions for the merger have been “decoupled” and that the SC will pursue the compliance of these conditions with ACE separately. “However, [from what we know], they are appealing. But, we do not know the result of the appeal. You have to ask ACE.”
According to a shareholder circular on the proposed merger, post-merger, Mercury Securities would be Apex’s single largest shareholder with a 30.99% stake, followed by ACE (15.71%) and Fun Sheung Development Ltd (9.91%).
At an extraordinary general meeting (EGM) yesterday, the merger resolution was passed with only a 54.8% majority. A proposed private placement of 20 million new Apex shares, representing approximately 6.2% of its enlarged issued share capital, as well as other resolutions, received similar support.
Speaking to reporters after the company’s annual general meeting and EGMs, Azizan said the company will proceed to obtain a vesting order from the High Court within the next two months.
The proposals are expected to be completed by early September. The company will also change its name in due course.
On completion of the proposed merger, Apex will have an enlarged issued share capital of 322.64 million shares worth some RM320 million.
However, Azizan noted that the second EGM to adopt a new constitution was not carried out, as the company needed at least 75% voting in favour to carry out the resolution. The resolution also received 54.8% support.
“The EGM is to adopt a new constitution. This is required under the listing requirement and it has to be done on or before the end of the year,” said Azizan, adding that Apex has until the end of the year to regularise the situation.
“We will be taking certain measures to ensure that it will be regularised as required and we will make the necessary announcement in due course.
“We do not see why the objection was raised and because it is necessitated by the law, we didn’t expect the motion to not be carried through because there is nothing extraordinary in the amendments that we suggested. It is a simple constitution required by law and most listed companies are amending their constitution... and there were no questions from the floor.
“But we know that there are major blocks of shareholders that do not agree with this,” said Azizan. He pointed out that Bursa Malaysia has requested all public-listed companies to adopt the new constitution by end-2019.
Apex is also in the midst of a legal case against 18 defendants — including its substantial shareholder Lim Siew Kim (daughter of the late Tan Sri Lim Goh Tong) — for allegedly acting in concert to obtain control of the company and breaching capital market rules in so doing.
According to Bloomberg data, of the 18 defendants that Apex has taken a legal suit against, seven are its substantial shareholders who cumulatively hold some 40.5% of the company.
Siew Kim owns 2.79%, and Lim Beng Guan, via his 95%-owned Concrete Parade Sdn Bhd, controls 4.93%. Other shareholder defendants include Apex’s second-largest shareholder Fun Sheung (15.78%), Yenson Investments Ltd (5.18%), Pinerains Sdn Bhd (4.39%), Joymap Bridge Sdn Bhd (3.74%) and Cergas Megah (M) Sdn Bhd (3.73%).
Shares of Apex closed unchanged at 98 sen yesterday, valuing the company at RM202.64 million.