Bogolyubov leads bid to oust OMH
board By John Helmer
MOSCOW - OM Holdings (OMH), the
Singapore-based manganese miner and metals
refiner, faces a new challenge from minority
Australian and Singaporean shareholders, who
formally announced this week their call for an
emergency general meeting (EGM) and the election
of a new board of directors. A shareholder meeting
and vote should be called by August 15 in
Singapore.
Among those targeted by the
move, the minorities have called for the removal
of Low Ngee Tong, the executive board chairman,
whose attempt to list OMH shares on the Hong Kong
Stock Exchange failed early this month. Low, his
wife Heng Siow Kwee and their allies in Singapore
and in China control an estimated 60% of the
shares. Australian lawyer and investment banker
Malcolm McComas has been
proposed as a candidate to replace Low.
Low is directly accused in Monday's
releases to the Australian Stock Exchange (ASX),
where OMH shares are listed and regulated, of
acting in ways that are "inconsistent with good
corporate governance".
The shareholder
rebellion is being led by Gennady Bogolyubov, an
international manganese mining mogul who owns
Consolidated Minerals, which, like OMH, mines
manganese in northwest Australia, shipping mostly
to buyers in China. Bogolyubov's subsidiary,
Stratford Sun, owns an 11.7% stake in OMH.
At least 20% of the shareholders are
reported to be backing the EGM and board spill. At
OMH's annual general meeting in Singapore on April
20, 35% of the shareholders voted against the
proposal of Low and his board directors to hold an
initial public offering (IPO) on the Hong Stock
Exchange, diluting most of the minorities to
insignificant stakes. In a separate ballot against
a board share option plan, 45% of the shareholders
voted against.
One of the proposed
beneficiaries of that options issue, board
director Tan Peng Chin, a lawyer in Singapore, has
been challenged by a replacement candidate, Peter
Debnam, a 17-year career politician in the New
South Wales parliament.
According to a
statement issued by Stratford Sun on Monday, it is
calling for the new board election because "it has
had serious concerns over the lack of transparency
in the conduct of the existing board of directors
of the Company", and because under Low's
leadership, OMH's board "has led the Company down
a path of systemic value destruction. It has
adopted strategies that have consistently failed
to deliver growth and has presided over a period
of significant share price decline."
According to the release, from the March
27 announcement of the proposed Hong Kong IPO to
July 4, when the plan was abandoned, OMH's share
price fell by 35%, "reaching the lows previously
only seen at the depths of the global financial
crisis".
When OMH told the ASX on July 5
that it was abandoning the IPO plan, it said:
In light of the unfavorable market
conditions, global market volatilities, the
current state of the manganese market and the
Company’s recent share price performance, the
Board has now formed a view that the proposed
dual listing is not currently in the best
interests of the Company and has decided to
discontinue with its plans to pursue a dual
listing on the HKSE.
Sources in Hong
Kong have told Asia Times Online that shareholder
resistance to the planned sale of 345 million new
shares, 69% of the current share issue, diluting
the minorities, triggered the share price
collapse, accompanied by investigations by
Australian and Hong Kong regulators.
Sources in Melbourne and Hong Kong claim
investigators continue to probe shareholding
evidence that at least 50% of the OMH shares are
held through nominees and trust arrangements by
unidentified interests. Non-disclosure of these
control interests was one of the hurdles for
getting approval of the IPO by the Hong Kong Stock
Exchange.
In Canberra, investigations are
reportedly focusing on whether the attempted IPO
constituted an attempt to transfer the Australian
mining assets to a foreign group without
authorization under Australia's Foreign Asset and
Takeovers Act and by the Canberra-based Foreign
Investment Review Board.
In Monday's
statement to the ASX, Stratford Sun said:
The Board and the senior management
of the Company have not been diligent in
ensuring disclosure of the ownership in, or
control over, shares in the Company and the
identity of key stakeholders as required under
relevant securities laws and the Bye-laws of the
Company.
Stratford Sun, and
Bogolyubov's Consolidated Minerals group have also
applied to the Federal Court of Australia in May
for a ruling to block the listing attempt,
alleging lack of proper disclosure and violations
of Australian law. The court in Sydney has yet to
rule.
Earlier this month, OMH said it was
considering "a number of strategic alternatives".
One of these is described as "the potential
de-merger of the Company’s smelting and
marketing/trading businesses from the Company’s
existing mining operations".
The
Singaporean and Australian minorities who opposed
the Hong Kong IPO have already reacted negatively,
with sources among the minority shareholders
claiming this is "a new way of removing asset
value from the listed company in Australia to
offshore companies, principally China-based
businesses". OMH operates trading companies in
Singapore, Tianjin, Shanghai and elsewhere, and a
ferromanganese refinery in China.
In
Monday's announcement of the board vote challenge,
the Bogolyubov group said "the attractiveness and
viability of the stand-alone mining business with
a sole customer and trading/smelting business with
a sole supplier is doubtful". Attacking OMH's
latest proposal, shareholders have been urged to
vote for new OMH leadership to prevent "further
erosion of shareholder value".
OMH's share
dropped 2% in ASX trading on Monday, to about A$1
per share, making a market capitalization of A$504
million (US$550 million). Before the September
2008 global crash in steel and manganese prices,
OMH was trading at A$2.30 per share, with a market
cap of A$1.2 billion.
As the OMH share
prices continued downwards in Tuesday trading, the
value of shares held by OMH chief executive Peter
Toth - revealed in required reports to the ASX -
have dropped more than A$1 million below the price
which he paid (and in part borrowed) to acquire
them.
Toth reacted fiercely to Monday's
board election call, telling a Perth newspaper the
EGM move is part of "an endless supply of legal
and corporate antics to frustrate, slow down,
undermine and de-stabilize the company from
executing its strategic initiatives at a critical
point in time ... The Company remains laser
focused and rock solid in its efforts to execute
its operational and strategic initiatives for the
benefit of all of OM’s shareholders."
Speaking for the Consolidated Minerals
group, Oleg Sheiko said: "The record of value
destruction is visible for all to see in the
market place. The only rock Mr Toth is speaking of
is the one that has been sinking so fast that $655
million in capital value has been lost in the past
three years; $323 million sacrificed this year
alone."
John Helmer has been a
Moscow-based correspondent since 1989,
specializing in the coverage of Russian and Asian
business.
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