Hong Leong extends EONCap offer to November 2010
Filed Under (Business News) by Webmaster on 16-07-2010
Tagged Under : eon capital, Hong Leong, primus pacific
Hong Leong Bank Bhd (5819) has extended its deadline for EON Capital Bhd (EONCap) to accept its RM5.06 billion takeover offer to November 30.
However, it expects EONCap to hold an extraordinary general meeting (EGM) for shareholders to decide on the deal by August 20.
It had previously expected EONCap to obtain all approvals for the deal, including from shareholders, regulators and the finance minister, by August 15.
EONCap, in a stock exchange filing late yesterday, said that Hong Leong had informed it of all the new conditions in a letter on the same day.
“The deadline extension comes as no surprise to us. It is to take into account the ongoing court case that only goes to trial in September,” a banking analyst from a local brokerage said.
EONCap’s biggest shareholder, Primus Pacific Partners, had filed a lawsuit against EONCap and its directors late last month in a bid to stop the Hong Leong deal from going through.
Primus claims that the deal is unlawful in the way it is structured and wants the directors to pay the bank danages to the tune of RM1.1 billion if the deal is passed by shareholders at an EGM.
EONCap said last week that it planned to go ahead with an EGM and, if shareholders gave the green light, the board would make a final decision on whether to accept the deal only after the court makes known its ruling on the case.
EONCap said yesterday that it would only be able to accept Hong Leong’s offer if the court decision was obtained no later than five business days after the date of the last approvals.
It also said that Hong Leong considered the outcome of the lawsuit as an “internal matter” for EONCap and, as such, felt there was no need to incorporate it into the terms of its offer.
Michael Lor, chief executive officer of the banking unit, EON Bank Bhd, told reporters earlier yesterday on the sidelines of an event that EONCap was still in the midst of updating its circular to shareholders on the EGM resolutions.
According to stock exchange rules, an EGM can only be held at least 21 days after the circular is sent out to shareholders. This rules out an EGM taking place this month.
Primus is against Hong Leong’s offer of RM7.30 a share as it 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.
