KUALA LUMPUR (April 4): Apparel maker Prolexus Bhd has denied that it breached the Capital Markets and Services Act 2007 (CMSA) in its acquisition of shares in South Malaysia Industries Bhd (SMI), and said it will not succumb to demands that it make a mandatory general offer (MGO) to acquire the remaining shares it does not own in the loss-making property developer.
“The group wishes to state that all the allegations made by SMI, particularly that it (Prolexus) is acting in concert with other companies and individuals to acquire more than 33% equity stake in SMI, are untrue,” said Prolexus in a statement on Tuesday (April 4).
It was responding to a statement issued by SMI earlier on the same day, in which SMI alleged that over 20 parties — comprising companies and individuals — are acting in concert with Prolexus’ units, Honsin Apparel Sdn Bhd and Hi-Q Media (M) Sdn Bhd, and that they have acquired more than a 33% stake in SMI without making an MGO in accordance with the CMSA.
SMI had also lodged a complaint with the Securities Commission Malaysia regarding the matter, saying it had provided documentary evidence of the breach. It also alleged that the parties acting in concert with Prolexus included YB Ventures Bhd, and an executive director and a substantial shareholder of both Prolexus and YB Ventures, alongside "some close relatives''.
Prolexus, which emerged as a substantial shareholder in SMI through Honsin and Hi-Q in mid-February, said it had “strict adherence” to Malaysia’s capital market guidelines in its investment in SMI, and had maintained an “impeccable governance” record.
“We have always been committed to upholding the highest standards of compliance, corporate governance and ethical business practices, and our investment in SMI is no exception. We deny any breach of the CMSA. The allegations are unfounded and without merit,” said Prolexus group executive director Tan Eik Huang.
Prolexus went on to say it holds a sufficient shareholding of 10.01% in SMI to request for an extraordinary general meeting — which it called for on Feb 17 to remove SMI's current five-member board, and to replace them with two persons nominated by Honsin and Hi-Q — and questioned the board of directors' refusal in providing SMI’s record of depositors (ROD).
On Feb 23, Honsin and Hi-Q filed a suit in the Kuala Lumpur High Court against SMI to compel it to provide the ROD.
“As the matter is currently pending before the court, and all of SMI’s allegations have been raised in court proceedings, Prolexus does not wish to comment further, and shall leave the matter to be determined by the court.
“The group further stresses that it remains dedicated to safeguarding the rights of its shareholders, and will continue to engage with the relevant authorities and professionals to resolve the situation fairly and transparently," said Prolexus.
“The group is confident it will be vindicated by the outcome of the challenges and legal threats. The group also reserves its rights to commence legal proceedings against SMI and its board of directors and all related parties for the false reporting,” it added.
Prolexus shares closed 2.5 sen or 5% lower at 47 sen on Tuesday, giving it a market capitalisation of RM130.06 million.
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