SINGAPORE (Jan 24): Shareholders of International Healthway Corp (IHC) have managed to remove four sitting directors of the company and replaced them with three new ones at their EGM on Monday.
Shareholders holding 738.3 million shares out of 1,072 million shares or 68.84% voted to pass each resolution to remove current directors Lim Thien Su, Gerald; Lim Beng Choo; Alviedo Rodolfo Jr San Miguel and Chia Chee Hyong, Leonard. 31.16% voted against the resolutions.
A similar 68.84% also voted for the appointment of Tan Chade Phang, Roger; Sho Kian Hin, Eric and Tay Eng Kiat, Jackson as new directors as well as the proposal to appoint auditors.
The removals and appointments took effect from Monday.
In addition to the EGM results, IHC have constituted a new board of directors.
They include Foo Yong How as GM of the company; an interim transition committee comprising Tay Eng Kiat, Jackson and foo Yong How; the appointment of Data Management Corp to conduct an internal audit and to secure the company’s records and financial information.
The new board has also suspended the executive functions and powers of Ms Lim Beng Choo, in respect of all executive appointments with the company and its subsidiaries.
She has also been directed to render assistance to the board, the interim transition committee or their appointed representatives.
IHC’s SGX filing also mentioned that when members of the interim transition committee and Data Management Corporation arrived at the company’s premises at 2 Leng Kee Road, Thye Hong Centre, Singapore, at around 8.20 pm, Ms Lim Beng Choo was seen leaving the premises with her computer and some documents.
The company said it has lodged a police report on the matter.
On Monday, IHC made a pre-market announcement warning that that the Japanese financial institution advising on and arranging for the proposed TMK refinancing is not willing to continue with the engagement if there is a change in the company’s board of directors in the next six weeks.
Last Dec, IHC had announced the proposed refinancing of a mezzanine loan of up to 8 billion yen (S$99.2 million) with a loan period of three years to refinance the TMK bonds issued by IHC Japan First TMK, and the proposed senior debt financing.
IHC also warned that the proposed Japan refinancing could be jeopardised should the TMK refinancing be unsuccessful.
The estimated net proceeds from the proposed refinancing is JPY 6 billion (S$74.4 million). IHC has sufficient cash flow to meet coupon payments on its two outstanding bonds — a S$50 million, 7% bond due on April 27 this year and another S$50 million, 6% bond due on Feb 6, 2018. But, based on its financials as at Sept 30, the company does not have sufficient funds to redeem the S$50 million bond that matures on April 27.
The announcement came as IHC urged shareholders to vote for the continuation of the company’s current board members in a Jan 18 circular. It noted that “several of the company's lenders have expressed concern over the requisitioning members’ move” and warned that any disruptions may adversely affect the company's ability to address the various issues that it faces, “which in turn may trigger negative consequences detrimental to the company.”
Monday’s EGM was called by Oxley Holdings deputy CEO Eric Low and his sister Audrey Low to replace four sitting directors and elect three new ones. Switzerland-based activist investor Quarz Capital Management (QCM) had entered the fray on Jan 13, with an open letter to IHC’s board stating its support for the ousting of the current board, and outlining a plan to stem the erosion of shareholder value by selling non-core assets.
In an open letter after the vote, QCM said it supports the new Board of Directors as the nominees seem to demonstrate diverse skillsets, which are highly relevant to IHC.
The substantial shareholders backing these candidates also have significant experience and successful track records in real estate development and value creation for shareholders, it added.
"QCM believes that the newly-energized IHC will be able to rebuild its reputation, regain the trust of investors and leverage on the vast contacts and expertise of the new board and shareholders to expedite on its forward strategy... QCM recommends IHC to deleverage its balance sheet by REIT — ing and reducing its stake in its Japan nursing home asset to release capital and create a listed asset light platform to grow its management fee income."
Shares of IHC last traded at 7 Singaporean cents.