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Eon Capital’s directors, except for Ng Wing Fai, plan to ask shareholders at an EGM to empower the board to make a final decision on whether or not to accept the deal.

Eon Capital Bhd (EONCap) (5266) has decided to go ahead and table to its shareholders a RM5.06 billion takeover offer from Hong Leong Bank Bhd despite an ongoing lawsuit over the matter.

Its directors, with the exception of Ng Wing Fai who represents the single largest shareholder Primus Pacific Partners, plan to ask shareholders at an extraordinary general meeting (EGM) to empower the board to make a final decision on whether or not to accept the deal.

It said the board would only make the decision if shareholders gave the go-ahead for the deal at the EGM, and after it gets the approval of the Minister of Finance.

More importantly, the board’s decision is subject to a final decision by the Kuala Lumpur High Court on the lawsuit filed by Primus last month, it said in a stock exchange filing late yesterday.

“This means, after getting all the approvals, the transaction will only go through if the court deems it lawful,” a source familiar with the matter said.

Primus claims the Hong Leong deal is unlawful in the way it is structured and wants EONCap’s directors to pay the bank damages of RM1.1 billion if the takeover bid goes through at an EGM.

On Tuesday, it also threatened to start contempt proceedings against the directors should the bank go ahead with the EGM.

But by saying it would wait for the court’s decision, EONCap seems to have found a way around potentially being sued for contempt, a banking analyst observed.

However, there are still concerns as to whether Hong Leong will decide to stay on with the deal given that the court matter could drag on.

The case will go to trial only from September 20 whereas Hong Leong has said it may walk away if all approvals for the deal are not secured by August 15.

Hong Leong has yet to indicate if it will extend its offer beyond that date.

Meanwhile, EONCap said that it would convene the EGM in “due course”.

A source said it may take one to two weeks before the group is able to issue a circular on the matter to shareholders.

It is possible an EGM may take place in mid- to late August.

Primus is against Hong Leong’s offer of RM7.30 a share as this is much lower than its entry cost of RM9.55 a share in 2007. It thinks a fair price should be at least RM8.91.

EONCap’s share price closed at RM6.89 yesterday.

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The Securities Commission (SC) has started investigating the activities of SJ Asset Management Sdn Bhd (SJAM), days after it stopped the company from managing new funds.

It also shed more light on how it came to examine SJAM, but stopped short of saying what was amiss at the fund management company despite queries by Business Times.

“We have commenced investigations into the activities of SJAM and appropriate action will be taken depending on the outcome of the investigations,” an SC spokesperson said.

On Tuesday, the SC ordered SJAM to stop getting new mandates and to maintain and preserve all records of clients’ trades and payments.

BDO Consulting Sdn Bhd was appointed to help assess SJAM’s books, accounts and records further.

However, BDO, hired early this year, now has its work scope expanded to include examining and monitoring SJAM’s transactions.

In an immediate response, SJAM chairman Datuk Kamaruddin Hamzah said that several directors and its management were giving their full cooperation to the SC.

“We have been in constant dialogue with the SC and other authorities and welcome the on-site examination of our records. We are giving our full cooperation,” he said in a statement yesterday.

Replying to questions from Business Times, the SC said it had enhanced its supervisory oversight of the fund management industry over the last few years.

Based on its risk-based supervision framework, the SC conducts examination of fund management companies in line with efforts to enhance investor protection.

The SC also undertakes thematic reviews of fund management companies’ operations and activities.

Kamaruddin, who is also one of the owners of SJAM Holdings Sdn Bhd – the parent company of SJAM – together with managing director Whai Onn Tan declined to comment further.

“Pending the conclusion of the SC’s examination, it would be improper for us to comment further,” he said.

Whai is also SJAM’s head of fund and portfolio management, while Kamaruddin sits on the board of directors of a few public-listed companies.

SJAM, a licensed fund company incorporated in 1992, manages regional investments in Japan, Hong Kong, Singapore, Thailand, Indonesia, the Philippines, Taiwan and South Korea.

Its investment products include fund management, managed portfolio, investment services and private equity accounts.

Based on the company’s website, SJAM has authorised capital of RM10 million and paid-up of RM6.38 million.

Its investment portfolio targets active, quality-growth companies with reasonable prices.

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