EONCap to issue notice to shareholders
Filed Under (Business News) by Webmaster on 25-05-2010
Tagged Under : eon bank, eon capital, Hong Leong Bank
The board of EON Capital Bhd (EON Cap) is expected to send out to shareholders its EGM notice and circular on the RM5.06bil takeover offer from Hong Leong Bank Bhd (HLB) this week.
It is understood that the banking group held a board meeting yesterday to discuss what would be written in the circular after it had decided to go ahead and table the proposed offer to shareholders despite facing resistance from its independent financial adviser (IFA), Credit Suisse Securities (M) Sdn Bhd, who has said the proposal was “not fair from a financial perspective.”
HLB values EON Cap at 1.42 times book.
A source familiar with the matter said the notice and circular could be send out earliest by tomorrow, with the board meeting for this purpose yesterday.
“The challenge is in the wording used in the circular as it must be convincing enough in light of the IFA’s opinion and because it must include the views of the party which objects,” the source said.
On Friday, EON Cap said it would recommend to shareholders to accept the RM5.06bil, which works out to RM7.30 per share, takeover offer from HLB to shareholders at an upcoming EGM despite the disapproval of its IFA as it was “in the best interests” of the financial group.
Director Ng Wing Fai, who represents EON Cap’s largest shareholder, Primus Pacific Partners Ltd, with its 20.2% stake, expressed his disagreement in the statement, saying that the proposed disposal was not in the best interests of the company.
Primus bought its shares at RM9.55 each in February 2008 and accepting HLB’s offer would crystalise its losses.
Ng’s views would be included in a circular to be sent to shareholders, EON Cap had said.
After the circular is sent out, the EGM should be held within 14 days.
In the interim, it’s business as usual for the banking group.
“Now that the offer will be tabled, we’ll just have to wait and see what happens. In the meantime, management is driving business as usual,” EON Bank group chief executive officer Michael Lor told StarBiz yesterday without elaborating.
EON Bank is EON Cap’s main asset.
Analysts said the bank on Friday reported results above estimates, with net profit for the first quarter ended March 31 at RM97.8mil, 23% higher compared with a year ago, boosted by savings on operating expenses that totalled RM36.1mil.
However, most houses did not make changes to their calls on the company’s stock following the release of the results.
“EON Cap achieved loans growth of 2.4% quarter-on-quarter, translating to annualised loan growth of 9.5% year-on-year marginally below our estimated 10.8% for FY10,” AmResearch said in a note yesterday.
The proposed takeover of EON Cap by HLB has been ongoing since the beginning of the year when HLB first made a RM4.92bil offer for EON Cap’s assets and liabilites. It was consequently rejected by the board for being “too low.”
The offer was then improved to the current one.
EON Cap’s major shareholders Rin Kei Mei, Tan Sri Tiong Hiew King and Khazanah Nasional Bhd remained committed to disposing of their stakes in EON Cap, analysts said.
The three have a combined 41.7% stake in EON Cap, which implies they would only require the support of the Employees Provident Fund (EPF), with an 11.8% interest, for the deal to succeed as the asset-liability mode of acquisition requires a 50% plus one vote from shareholders.
The EPF had been reported to have said that it would not abstain from voting at the upcoming EGM.
