The dispute between uncle and nephews in the Tan family that controls the Tan Chong group flared up in the open eight years ago, breaking the taboo among Chinese business families to not wash their dirty linen in public.
On May 21, 2001, Datuk Tan Kim Hor, co-founder of the Tan Chong group, and his family filed a petition in High Court to wind up Tan Chong Consolidated Sdn Bhd (TCC) so that the assets of the family vehicle could be distributed in specie. The petition was filed against the descendant family of his younger brother, the late Tan Sri Tan Yuet Foh.
Yuet Foh had co-founded Tan Chong with Kim Hor in the early 1970s, using TCC as the vehicle. After his demise in 1985, his sons, led by eldest son Datuk Tan Heng Chew, controlled 55.4% of TCC while Kim Hor’s family owned 44.6%.
TCC’s crown jewel is its 45.28% stake (now 46.51%) in Bursa Malaysia-listed motor vehicle assembler and distributor Tan Chong Motor Holdings Bhd and 45.28% in Tan Chong International Ltd (TCIL) listed in Hong Kong. Both TCM and TCIL are worth RM1.13 billion and RM1.19 billion respectively based on their market capitalisation last Thursday.
Considering the number of family members involved in the dispute, it was an all-out war between Kim Hor and his nephews led by Heng Chew.
According to a copy of the petition filed with the Companies Commission in 2001, Kim Hor, then 78, and chairman of the listed TCM, his eldest son Kheng Leong, Kang Leong (second son), Boon Pun (third son), Hoe Pin (fourth son), Chee Keong (fifth son), Beng Keong (sixth son), Ban Leong (seventh son), Lee Lang (second wife) and Pang Sew Ha (third wife) were the petitioners for the winding-up of TCC. They had a collective ownership of 44.58% in TCC.
The petitioners named eight members of the Yuet Foh family as respondents of the winding-up petition.
Heng Chew, then 55, and executive deputy chairman of TCM, was named the first respondent, followed by Eng Soon (Yuet Foh’s second son), Su Leong (Yuet Foh’s third son), Eng Hwa (Yuet Foh’s fourth son), Eng Keat (Yuet Foh’s fifth son), Boon Siong (Yuet Foh’s sixth son), Boon Hooi (Yuet Foh’s seventh son) and Teh Siew Yoke (Yuet Foh’s third wife). They controlled 55.42% of TCC.
In the petition, Kim Hor’s family stated, among others, that the respondents had disregarded their interests, and that their participation in the management of the listed public companies in the Tan Chong group had been marginal, thus causing them to file the petition to wind up TCC.
“The mutual trust and confidence which existed between the petitioners and the respondents have irretrievably broken down and negotiation to get back their own respective shares failed,” said Kim Hor’s family in the petition.
The petition also involves accusations made by Kim Hor’s faction against Heng Chew and others for “disregarding or endangering” the operations of the Tan Chong group. Heng Chew’s faction had contested such claims.
To counter the claims by Kim Hor’s family, whose petition to wind up TCC, if successful, could loosen the grip of Yuet Foh’s family in the Tan Chong group, Heng Chew and his siblings on June 2001 filed a notice of motion to strike out his uncle’s petition to wind up TCC. The motion was allowed and the petition was struck out on Oct 9, 2001.
A day after the petition was struck out, Kim Hor’s family filed an appeal in the Court of Appeal, but it was only on May 2, 2002, that the record of appeal was duly filed. Kim Hor’s family was running out of time as TCM’s 30th annual general meeting (AGM) was to be held on May 29, 2002, where Kim Hor was seeking re-appointment as a director of TCM.
Kim Hor lost his board seat at TCM in the gruelling AGM, which lasted the whole day. Faced against Heng Chew’s faction, the co-founder of Tan Chong ran short of the votes needed to be re-appointed as a director despite winning on a show of hands with the support of minority shareholders present at the AGM.
Kim Hor didn’t stand a chance without the support of TCC, which has voting rights over 45% of the shares.
The feud didn’t end there. On April 18, 2003, Warisan TC Holdings Bhd announced to Bursa Malaysia that eight members of the company, with a total shareholding of 0.44%, had each given a special notice to the company of their intention to propose a resolution at the AGM to remove Boon Pun as a director of Warisan TC. Boon Pun was subsequently removed from the board with immediate effect on May 20, 2003, after the AGM.
Hoe Pin, Kim Hor’s fourth son who was running the Nissan franchise at TCM, also quit from the group. He later joined DaimlerChrysler Malaysia in 2003 as one of its vice-presidents.
Both families went their separate way after a series of tussle, though Kheng Leong, who holds Singapore citizenship, remains as an executive director in TCIL where Heng Chew’s younger brother Eng Soon is the chairman.
Kim Hor’s family went on to set up its own business, using Wawasan TKH Sdn Bhd (WTSB) as the vehicle. In August 2005, WTSB took a 28.74% stake in Greatpac Holdings Bhd for RM12.9 million, and had injected its newly established auto-parts manufacturing businesses into the company. Greatpac was subsequently renamed Wawasan TKH Holdings Bhd.
WTSB, together with the individual stakes owned by Kim Hor, Boon Pun, Hoe Pin, and Ban Leong (Kim Hor’s seventh son), currently controls 48.59% of Wawasan TKH. The listed outfit continues to be loss making since the takeover by Kim Hor’s family, with total net loss of RM98.8 million over the last three financial years from FY12/2006 to FY12/2008, with the latest FY showing a net loss of RM24.4 million on a turnover of RM95.7 million.
Wawasan TKH, which has a market value of RM37.5 million, lost RM3.4 million in 1Q2009 ended March 31. The company’s gearing remains high, with a net borrowing of RM54.7 million as at March 31, 2009, compared to its shareholders’ fund of RM46.9 million.
It would seem that proceeds from the settlement on Kim Hor’s family interests in TCC would help the family raise capital and enhance the operations at Wawasan TKH.
That is, provided if it is the family’s intention to sell its stakes and cut ties with the Tan Chong group to focus on growing its own business.
Alternatively, their minority stakes in the listed companies in the Tan Chong stable could also one day be the launch pad for the return of the Kim Hor faction in some of the listed companies within the group.
This article appeared in Corporate page of The Edge Malaysia, Issue 761, June 29-July 5, 2009