KUALA LUMPUR: Shares in Lysaght Galvanised Steel Bhd, which have been trending downward from RM6.20 since late June to touch RM3.08 in mid-October, surged as much as 10.34% to a high of RM3.95 in yesterday’s morning trade, on expectations of a possible proxy fight brewing in the company.

The counter eventually closed at RM3.69, up 3.07% from last Friday’s close, giving it a market capitalisation of RM151.77 million.

The buying interest coincides with the expectations of a possible proxy fight. There is a family feud going on between the oldest daughter, Annie Chew Meu Jong, of the company’s late founder Chew Kar Heing and his son-in-law, Liew Hoi Foo, to gain control of the company. Lysaght has been doing well in terms of earnings performance in recent years.

The feud came to the fore when the company’s proposed share split, bonus issue and free warrants exercise hit a snag as one of its directors, Meu Jong, did not sign the director’s declaration two weeks ago.

Its controlling shareholder Lysaght (M) Sdn Bhd (LMSB), which owns a 55.14% stake in Lysaght, has written to the company to say it would vote against the proposed exercise. LMSB is 40%-owned by Chew Bros (M) Sdn Bhd, which is controlled by Meu Jong, according to the Companies Commission of Malaysia.

The proxy fight is mainly at LMSB, which according to The Edge weekly (Oct 27-Nov 2), is seeking to gain more shareholding in LMSB in order to control Lysaght. It was also reported that Singapore-listed United Engineers Ltd (UEL), which owns an 11.63% stake in LMSB, could be the key to settling the family tussle.

The infighting started after the passing of Kar Heing in February. As managing director, Liew — the husband of Kar Heing’s second daughter Chew Mee Lee — has been at the helm of Lysaght for nearly a decade without much interference from the Chew family. Kar Heing’s oldest daughter Meu Jong came into the picture after being appointed a director of Lysaght in late September.

It seems that Meu Jong is in a stronger position at the shareholders’ level, but Liew still has a bigger say at the board level.

This article first appeared in The Edge Financial Daily, on October 28, 2014.