REG - Aseana Prop Ltd - Posting of Circular

Aseana PropertiesAnnouncement

03/06/2024 10:15

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RNS Number : 8528Q  Aseana Properties Limited  03 June 2024

3 June 2024

 

 

 

Aseana Properties Limited

("Aseana" or the "Company")

 

 

Posting of Circular and Notice of Requisitioned General Meeting

 

 

Aseana Properties Limited (LSE: ASPL), a property developer in Malaysia listed
on the Main Market of the London Stock Exchange, announces that it will today
post to the Company's shareholders a circular convening a Requisitioned
General Meeting (the "Circular"). This follows receipt of a letter on behalf
of shareholders who hold more than one-tenth of the total voting rights of the
Company to requisition a general meeting of the Company.

 

The Requisitioned General Meeting will be held at 10.30 a.m. on 3 July 2024 at
the registered office address of the Company at Osprey House, 5-7 Old Street,
St. Helier, Jersey, JE2 3RG, Channel Islands.

 

The Circular will shortly be made available on the Company's website:
http://www.aseanaproperties.com (http://www.aseanaproperties.com) and
submitted to the National Storage Mechanism to be made available for public
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . Extracts from the
Circular are set out below and should be read in conjunction with the
Circular.

 

For further information:

 

Aseana Properties Limited

Nick Paris, Non-Executive Chairman
 nickparis@btinternet.com (mailto:nickparis@btinternet.com)

 
            +44 (0)7738 470550

Grant Thornton UK LLP

Philip Secrett, Elliot Peters
                            +44 (0)207 383 5100

 

 

Dear Shareholder

Notice of Requisitioned General Meeting

1              Introduction

 

As announced by the Company on 13 May 2024, the Company received a requisition
notice pursuant to article 89(1) of the Companies (Jersey) Law 1991 (as
amended) from funds managed by LIM Advisors Limited ("LIM"), LIM Asia
Multi-Strategy Fund Inc. (registered owner of 16,522,022 Shares and beneficial
owner of 70,000 Shares) and LIM Asia Special Situations Master Fund Ltd
(registered owner of 9,552,170 Shares) (the "Requisitioning Shareholders"),
requesting that the Company convene a general meeting at which two resolutions
are required to be put to Shareholders (the "Requisition Notice"). As at the
date of the Requisition Notice, the Requisitioning Shareholders held in
aggregate not less than one-tenth of the total voting rights of the Company.
The resolutions to be put to Shareholders at the Requisitioned General Meeting
relate to the appointment of two new directors proposed by the Requisitioning
Shareholders (the "Resolutions") - Dato' Dr Thong Kok Cheong ("KC Thong") and
Clare Mariam Binti Muhiudeen (together, the "Proposed Directors").

 

As a result of the Requisition Notice, the Company is required to convene the
Requisitioned General Meeting for the purposes of allowing Shareholders to
consider and vote on the Resolutions. The full text of the Resolutions is set
out in the Notice of Requisitioned General Meeting at the end of this
document.

 

The purpose of this letter is to provide Shareholders with details of the
Resolutions and explain why the Board believes that these Resolutions are not
in the best interests of the Company or its Shareholders as a whole. The
Directors therefore recommend unanimously that you vote against the
Resolutions.

 

2              Reasons why the Board recommends that you VOTE
AGAINST the Resolutions

 

The Board considers that the Resolutions, if passed, present a significant
risk to the future prospects of the Company.

 

The Board has been in discussions with LIM for a number of months. On 2 April
2024 the Board received a written request from LIM that Thomas Holland, Hock
Chye Tan and I resign immediately as Directors and that the Board appoint KC
Thong and Ms Muhiudeen as new directors, with KC Thong to be elected as
chairman of the Company. The request stated that if the Directors did not
comply with LIM's request they would requisition an extraordinary general
meeting at which resolutions to effect such changes would be proposed and
approach other Shareholders holding more than 50% of the Shares to obtain
their signatures on written notices to the Board requesting that the proposed
changes be made. In these various interactions, LIM complained about the
failure to complete the sale of the Company's assets in Sandakan, repay the
debt owed to the three banks who acted as guarantors (the "Bank Guarantors")
of the Medium Term Notes and raised a number of other allegations. In
particular, the Board strongly rejects the Requisitioning Shareholders'
allegation of poor corporate governance and any perceived failure of the Board
in the pursuit of the Divestment Policy adopted by the Company.

 

The Company owns two assets in Sandakan in East Malaysia - a ten floor luxury
hotel and the adjacent Harbour Mall shopping centre (the "Sandakan Assets").
On 30 June 2023, the Board announced the conditional sale of the Sandakan
Assets to a single purchaser for a price of MYR 165 million, subject to the
receipt of regulatory approvals. The completion of this sale has been
difficult to achieve owing to the complications facing foreign purchasers of
Malaysian assets but on 8 April 2024 the Board announced that the Company had
signed a supplemental sale and purchase agreement to extend the original sale
and purchase agreement at an unchanged price. Efforts to complete the sale are
ongoing but have been slower than expected. However, the Directors continue to
believe that these sales will be successfully completed. Unfortunately, the
failure to complete the sale in 2023 resulted in the Company being unable to
repay the Medium Term Notes that had been used to finance the construction of
the assets when they fell due on 8 December 2023. However, the Board is
working closely with the Bank Guarantors who have now repaid the holders of
the Medium Term Notes the outstanding principal plus interest as at 8 December
2023. The Bank Guarantors remain supportive of the Company's efforts to
complete these sales and the Board continues to keep the Bank Guarantors
updated on progress.

 

The Company is also making progress with the sale of each of the other
remaining assets owned by the Company although none of them are easy to
achieve, particularly given the oversupply of luxury residences and hotels in
central Kuala Lumpur. The Company's remaining assets include the 45 unsold
residences at The RuMa Hotel & Residences in Kuala Lumpur in respect of
which, on 29 April 2024, the Company announced the sale of a block of 10 units
and the sales of further blocks and individual sales are under negotiation. A
number of prospective purchasers of The RuMa Hotel itself are currently
undertaking due diligence on the asset. Given the complexity of The RuMa Hotel
structure, this process is expected to take some time. The Company is also in
discussions relating to the sale of the remaining plot of land in Kota
Kinabalu.

 

On 30 May 2023, Shareholders voted to extend the life of the Company until May
2025. The Board believes that the passing of the Resolutions at this time
could lead to an accelerated liquidation of the Company if such appointments
should cause a failure or material delay to the completion of the sale of the
Sandakan Assets and/or repayment to the Bank Guarantors. Since receipt of the
Requisition Notice was announced, the Board has already had to field enquiries
from the parties involved in the sale of the Sandakan Assets and reassure them
that the Company is in a position to complete the transaction and there is no
reason for further delays.

 

The Requisition Notice contains only two resolutions which propose the
appointment of the two Proposed Directors - notwithstanding that LIM has
referred to the resignation of certain Directors before (as noted above), the
Requisition Notice does not contain resolutions to remove any existing
Director. Nevertheless, the Directors recommend that Shareholders vote against
the Resolutions for the following reasons.

 

KC Thong is well known to certain members of the Board, being a long-standing
shareholder (holding 11,959,608 Shares representing approximately 7.48 per
cent. of the voting rights of the Company as at the date of this Circular) and
having been directly involved in certain transactions undertaken, or proposed
to be undertaken, by the Company in the past. From the Board's engagement with
LIM, we understand that, in part, the proposed Resolutions seek to address
perceived shortcomings in corporate governance by LIM. However, the
Institutional Shareholder Services group guidance states that persons who hold
5 per cent. or more of the voting rights of a company should be considered as
a "significant shareholder" which could be a circumstance which is likely to
impair, or could impair, a director's independence. Further, KC Thong was part
of a group of Shareholders who had elected to join (i) Ireka Corporation
Berhad, the parent company of the Company's former development manager, and
(ii) Legacy Essence, the family investment company of the Lai family, former
executives of Ireka Corporation Berhad, in demerging their pro rata share of
assets from the Company in 2020, although this transaction did not proceed.
For these reasons, the Board considers KC Thong to be non-independent and that
the appointment of KC Thong to the Board would present a risk to the Company
and Shareholders.

 

Ms Muhiudeen is not known to the Board, other than in connection with the
Requisition Notice. The Board has reviewed Ms Muhiudeen's CV provided by the
Requisitioning Shareholders and, whilst she has significant human resources
expertise, the Board cannot determine any relevant experience with regard to
real estate transactions, distressed wind-down situations or listed public
company experience. Accordingly, the Board does not consider Ms Muhiudeen to
have the required experience and expertise to join the Board.

 

Brief biographical details of KC Thong and Ms Muhiudeen, provided by the
Requisitioning Shareholders, are set out in Part 2 of this document.
Shareholders should note that those details have not been checked and/or
verified by the Company. No conversations have yet been held by the Directors
with either of the Proposed Directors about the Company, nor have any due
diligence or 'know your customer' checks been performed on them by the Company
or its Financial Adviser.

 

The Board believes that the appointments of the two Proposed Directors would
weaken the Company's corporate governance, in particular because KC Thong
could not be classified as an independent director in light of his previous
business dealings with the Company, his commitments to demerge his share of
the Company's net assets with the Lai family in August 2020 and his support
for their proposal in August 2022 to remove Helen Wong as a Director. The
Board as currently comprised continues to discharge its duties solely in the
interests of all Shareholders and considers that its current composition
allows the Board to do this effectively. Given that the Company is pursuing a
Divestment Policy, the Company is being run with a view to minimising its
operating costs and the Directors question the sense of moving from a five
person Board to a seven person Board when they had planned to reduce operating
costs, including Board numbers, once the Sandakan Assets are sold.

 

The Directors have made it clear to LIM that it is not advisable to make
substantial changes to the composition of the Board at this stage of the asset
disposal process. Helen Wong (the Company's Divestment Director, who is
leading all of the divestment efforts referred to above) has indicated that
she would consider her position as a Director of the Company if either or both
of the Proposed Directors were to be appointed, and her team have indicated
that they would resign were Helen Wong to step down as a Director. If Helen
Wong were to resign as a Director, the remainder of the current Board,
consisting of Thomas Holland, Bobby Minty, Hock Chye Tan and me, would also be
forced to consider our positions as Directors, as the Company would have no
Divestment Director or operations personnel at the Group level, making it very
difficult to continue to run the Company, and setting back the asset
divestment efforts considerably. In addition, the Company's status as a listed
company may be prejudiced should the Board conclude that the Company no longer
has adequate procedures, systems and controls to enable it to comply with its
obligations under the Listing Rules. Grant Thornton UK LLP, the Company's
financial adviser has indicated that it will resign from its role in the event
of changes to the composition of the Board and/or if the Company no longer
satisfies the requirements to comply with its Listing Rule obligations.
Further announcements will be made in due course in the event that these
resignations are tendered.

 

Should either or both of the Proposed Directors be appointed at the
Requisitioned General Meeting, the new Board will liaise with LIM and other
Shareholders to effect the appointment of replacement Directors and staff for
the transition so as to ensure continuity and minimal disruption in the
management and operations of the Company. However, the consequences of the
Requisition Notice and the possible loss of all of the current Directors and
operating personnel at Group level are likely to be very serious and could
lead to (i) the collapse of all of the current disposal efforts, ultimately
resulting in delays and increased costs associated with the disposals, (ii)
foreclosure of the Medium Term Notes security over the Group's assets by the
Bank Guarantors in order to get repaid, (iii) an inability to run the
Company's operations on a day to day basis, which would also impact the
Company's ability to publish its interim accounts for the six month period to
30 June 2024 by the deadline of 30 September 2024 in compliance with the
Company's obligations pursuant to the Disclosure Guidance and Transparency
Rules and potentially leading to a suspension in trading of the Company's
Shares, and (iv) the inability of the Company to raise enough working capital
to finance itself. The Company did raise US$1 million in working capital loans
in March 2024 but loans of a further US$1 million which had been arranged
could not be completed because of the uncertainty created when LIM first
demanded substantial changes to the composition of the Board, instead causing
the Company to incur unnecessary additional advisory fees and expenses to
advise the Company on the responses to those demands. In addition, changes to
the composition of the Board may trigger the requirement for the Company to
seek legal and tax advice as to the immediate steps required to be taken to
ensure that the Company could continue to demonstrate management and control
in Jersey from a tax residency perspective, incurring further unnecessary cost
for the Company.

 

In conclusion, if the Resolutions are passed the Board believes that the
efforts of the current Board and team will be significantly set back and will
result in the Company incurring more costs via additional debt service
payments due to delayed sales efforts, additional potential claims for LAD
(liquidated and ascertained damages) payments and having to recruit a new team
to manage the divestment processes, the sales and the deteriorating conditions
of the assets. The pursuit of the Resolutions by the Requisitioning
Shareholders will therefore negatively and disproportionately affect all
Shareholders.

 

3                 Company update

 

The Company published its Annual Report for the year ended 31 December 2023 on
30 April 2024 which provides details of the Company's financial position.

 

4                 Arrangements for the Requisitioned General
Meeting

 

The Requisitioned General Meeting will be held at 10.30 a.m. on 3 July 2024 at
the registered office address of the Company at Osprey House, 5-7 Old Street,
St. Helier, Jersey, JE2 3RG, Channel Islands.

 

The Requisitioned General Meeting will be held in person. If you decide not to
attend the meeting in person it is important that you do still cast your votes
in respect of the business of the meeting and you can do so by voting by proxy
in accordance with the instructions set out in paragraph 6 (Action to be taken
in respect of the Requisitioned General Meeting) below.

 

5                 Resolutions to be proposed at the
Requisitioned General Meeting

 

The Resolutions to be put to Shareholders at the Requisitioned General Meeting
comprise two ordinary resolutions in relation to the appointment of the
Proposed Directors proposed by the Requisitioning Shareholders.

In order to be validly passed an ordinary resolution of Shareholders will
require a vote in favour by Shareholders holding a majority of the Shares
represented at the Requisitioned General Meeting.

 

The Directors recommend unanimously that you VOTE AGAINST the Resolutions.

 

6              Action to be taken in respect of the Requisitioned
General Meeting

 

Shareholders will find enclosed with this Circular a Form of Proxy for use in
connection with the Requisitioned General Meeting. Shareholders are requested
to complete and return the enclosed Form of Proxy as soon as possible.

 

To be valid, Forms of Proxy for use at the Requisitioned General Meeting must
be completed and returned in accordance with the instructions printed thereon
to the registered office of the Company at Osprey House, 5-7 Old Street, St.
Helier, Jersey, JE2 3RG, Channel Islands by post as soon as possible and, in
any event, so as to arrive no later than 10.30 a.m. on 1 July 2024 (or, in the
case of an adjournment, not later than 24 hours before the time fixed for the
holding of the adjourned meeting).

 

The results of the votes cast at the Requisitioned General Meeting will be
announced as soon as possible, once known, through a Regulatory Information
Service.

 

5              Recommendation

 

For the reasons set out above, the Directors recommend unanimously that
Shareholders VOTE AGAINST the Resolutions to be proposed at the Requisitioned
General Meeting.

 

Yours faithfully

 

Nicholas John Paris
Chairman
for and on behalf of

Aseana Properties Limited

 

 

 

Part 2 - Biographical details of the Proposed Directors

 

Please note: The information in this Part 2 relating to the Proposed Directors
has been provided by the Requisitioning Shareholders and has not been checked
and/or verified by the Company.

 

Dato' Dr Thong Kok Cheong (KC Thong)

KC Thong owns 12,775,532 Shares and has been an investor since the Company's
Initial Public Offering. KC Thong aged 78, graduated from the Imperial College
of Science and Technology, London, with First Class Honors in Chemical
Engineering in 1968 and a PhD in 1971.  He worked for Royal Dutch Shell for
19 years, gaining considerable experience in the upstream business of
exploration, production of oil and gas, and downstream oil business in
refining, supply, marketing and trading of oil products. As Chief Corporate
Planner for Shell Group of Companies in Malaysia, he contributed to several
industry position papers on the Asean Petroleum Product Outlook, Malaysian
Energy Outlook, Balance of Payments (Invisibles), and role of Foreign
Investments under the auspices of the MICCI and Malaysian National Committee -
World Energy Conference. In 1993, he entered business and was executive
director of two publicly listed Malaysian companies (Insas Berhard and Jasa
Megah Berhard, which later became Dijaya and then Tropicana Berhard).  He
resigned in 2000 to pursue his interests in property development, investments,
and consultancy. KC Thong is a Malaysian national and lives in Kuala Lumpur,
Malaysia.

 

Clare Mariam Binti Muhiudeen

Clare Muhiudeen aged 62 graduated from University College London with a BSC in
Psychology in 1983 and graduated from the London School of Economics in 1984
with a MSC in Industrial Relations. Ms Muhiudeen has had a successful career
in Human Resources and consulting for 38 years based in London and Hong Kong,
with EMEA and Asia Pac roles with Watson Wyatt LLP, Watson Wyatt Worldwide,
Towers Watson, International WTW until retiring in 2023 where she was Chair of
the Asia Leadership Committee representing all businesses and markets across
WTW Asia including Malaysia. Ms Muhiudeen is a Malaysian national and HK
Permanent Resident.  She is also a sub-committee member of Women's Network of
Malaysian Chamber of Commerce Hong Kong.

 

Part 3 Definitions

The following definitions apply throughout this Circular unless the context
otherwise requires:

 "Board" or "Directors"                        the directors of the Company
 "Circular"                                    this circular to Shareholders incorporating the Notice of Requisitioned
                                               General Meeting
 "Company"                                     Aseana Properties Limited
 "Disclosure Guidance and Transparency Rules"  the UK disclosure guidance and transparency rules made by the UK Financial
                                               Conduct Authority under Part VI of the Financial Services and Markets Act
                                               2000, as amended from time to time
 "Divestment Policy"                           the divestment policy of the Company adopted on 22 June 2015
 "Form of Proxy"                               the form of proxy for use by Shareholders in connection with the Requisitioned
                                               General Meeting
 "Group"                                       the Company and its subsidiaries from time to time
 "LIM"                                         LIM Advisors Limited
 "Listing Rules"                               the listing rules made by the UK Financial Conduct Authority under Part VI of
                                               the Financial Services and Markets Act 2000, as amended from time to time
 "Notice of Requisitioned General Meeting"     the notice convening the Requisitioned General Meeting set out on pages 12 to
                                               14 of this Circular
 "Proposed Directors"                          Dato' Dr Thong Kok Cheong and Clare Mariam Binti Muhiudeen
 "Registrar"                                   Computershare Investor Services (Jersey) Limited
 "Regulatory Information Service"              a service approved by the London Stock Exchange plc for the distribution to
                                               the public of announcements and included within the list maintained on the
                                               London Stock Exchange plc's website
 "Requisition Notice"                          has the meaning given to it in paragraph 1 of Part 1 (Letter from the
                                               Chairman) of this Circular
 "Requisitioned General Meeting"               the general meeting of the Company to be held on 3 July 2024 at 10.30 a.m. (or
                                               any adjournment thereof), notice of which is set out at the end of this
                                               Circular
 "Requisitioning Shareholders"                 LIM Asia Multi-Strategy Fund Inc. (registered owner of 16,522,022 Shares and
                                               beneficial owner of 70,000 Shares) and LIM Asia Special Situations Master Fund
                                               Inc (registered owner of 9,552,170 Shares)
 "Resolutions"                                 Resolution 1 and Resolution 2, each to be proposed as an ordinary resolution
                                               at the Requisitioned General Meeting, to appoint two new directors to the
                                               Board
 "Shareholder"                                 a holder of Shares
 "Shares"                                      ordinary shares of US$0.05 in the capital of the Company

 

 

Expected Timetable of Principal Events

 

 Publication of this Circular                         3 June 2024

 Latest time and date for receipt of Forms of Proxy   10.30 a.m. on 1 July 2024

 Requisitioned General Meeting                        10.30 a.m. 3 July 2024

 Results of Requisitioned General Meeting announced    3 July 2024

 

Notes:

(i)                The times and dates set out in the timetable
above and mentioned throughout this Circular are indicative only and may be
adjusted by the Company without further notice. Any changes will be notified
to Shareholders through an RIS.

(ii)            References to times in this Circular are to Jersey
time (BST) unless otherwise stated.

 

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