KUALA LUMPUR (May 17): Edelteq Holdings Bhd, which is on the way to be listed on the ACE Market of Bursa Malaysia, found itself in hot water, just as the group was looking to raise RM24 million through the initial public offering.
This is because its group CEO and largest shareholder Chin Yong Keong is being sued by his former employer Mi Technovation Bhd for allegedly breaching employment contracts and abuse of legal process.
Mi Technovation also alleged that Chin had provided false or misleading statements about his profile in the prospectus published by Edelteq, pertaining to his employment history in the former.
On Wednesday (May 17), Mi Technovation announced on Bursa that it had filed the writ in the Penang High Court against Chin on May 14.
According to the group in a summary of the claims provided by its solicitors CK Lim Law Chambers, Chin had employed as Mi Technovation’s chief operation officer cum general manager since July 2, 2018.
“On March 14, 2019, CYK (Chin) wrote to the company alleging that the company had breached the employment contract and demanded for the restoration of his responsibility, authority and scope of work which he claimed to have been taken away by the company.
“Following which, an independent committee was set up to investigate CYK’s allegations. The independent committee found no evidence supporting CYK’s allegation,” said the group in the summary, which was filed on Bursa Malaysia.
Chin disagreed with the independent committee’s findings and deemed himself constructively dismissed, the group said.
Mi Technovation alleged that Chin had breached his employment contract when he refused to report to work on March 26, 2019.
On May 3, 2019, Chin subsequently filed a representation for reinstatement under Section 20(1) of the Industrial Relations Act 1967.
“Despite having sought for a reinstatement to his former position in the company under the industrial dispute, CYK joined Edelteq Holdings Bhd in April 2019. The industrial dispute proceeded to conciliation meetings in May and June 2019,” said Mi Technovation.
However, according to Mi Technovation, Chin withdrew his representation on July 19, 2019, but without disclosing it to the company.
Mi Technovation said that it subsequently discovered that a statement was published in the prospectus of Edelteq dated May 9, 2023, stating that Chin had left the company in March 2019.
Mi Technovation took the position that the aforesaid statement was false or misleading and that material facts were not disclosed including his repudiation of the employment contract in the company.
“The said statement is calculated to mislead readers in that it gives the impression that there was mutual termination of his employment contract.
“Hence, the writ is to compel CYK to publish or cause to be published a statement notifying the Bursa Malaysia, as part of his disclosure obligation, all material events transpired since his letter to the plaintiff dated March 14, 2019 leading to his employment with Edelteq Holdings Berhad, as pleaded in the statement of claim dated May 14, 2023,” stated Mi Technovation in the summary.
Besides seeking for Chin to publish a statement notifying Bursa all the material events that had transpired since his letter to Mi Technovation dated March 14, 2019 leading to his employment with Edelteq, the company is also seeking for relief including general damages.
According to Mi Technovation, the writ has been fixed for case management on May 29, 2023. As at the date of the summary write-up, the company’s solicitors are taking steps to effect service of the writ on Chin.
As of Wednedsay’s closing, Mi Technovation was trading at RM1.40 per share, valuing the group at RM1.26 billion.
As part of its IPO, Edelteq is issuing 100 million new shares, representing 18.8% of its enlarged share capital, as well as an offer for sale of 43.2 million existing shares, representing 8.1% of the enlarged shares, by way of private placement to selected investors.
Based on an issue price of 24 sen per share and an enlarged share capital of 532.5 million shares, Edelteq will have a market capitalisation of RM127.81 million upon listing. The group is scheduled to be listed on the ACE Market on May 30.
UOB Kay Hian Securities (M) Sdn Bhd is the principal adviser, sponsor, underwriter and placement agent for Edelteq’s IPO.
Prior to the IPO, Chin held 58.23% of the shares in Edelteq. After the public issue and the offer for sale of existing shares, his holding in Edelteq will be diluted to 44.05%, according to the group’s prospectus.