This article first appeared in The Edge Malaysia Weekly on April 22, 2024 - April 28, 2024

SUPERMAX Holdings Sdn Bhd (SHSB), which holds 40.3% in Supermax Corp Bhd, is the subject of a winding-up petition.

SHSB is the private company of Datuk Seri Stanley Thai and his wife, Datuk Wira Cheryl Tan Bee Geok. The couple, who have been and still are having differences in their relationship since May 2021, control Supermax through SHSB.

Thai has 57.5% in SHSB while Tan holds 42.5%. Their effective stake in Supermax is 23.2% and 17.1% respectively.

According to sources, Tan is said to have filed a winding-up petition against SHSB to enable her to directly own the shares in the glove manufacturer. Under the current structure, she holds the shares indirectly through SHSB in which Thai has the majority stake.

Tan contends that the original purpose of setting up SHSB was for the purpose of the family’s estate planning. In her suit, Tan is believed to have contended that having a family company to hold the assets for the benefit of the children was no longer workable considering the deterioration in the relationship between Thai and herself.

“SHSB was set up to hold the assets of the couple for the benefit of their children. It was set up at the height of the Covid-19 pandemic in December 2020 when the couple transferred all their shares into the holding company.

“SHSB was to be jointly managed by both Thai and Tan. But since the breakdown in the relationship, coupled with the fact that both individuals have filed legal suits against each other, the existence of SHSB is no longer practical,” say sources.

The move to set up SHSB started in 2018 and was completed only in December 2020. The exercise went through the regulatory scrutiny of Bursa Malaysia and Securities Commission Malaysia.

After obtaining all the approvals, Thai and Tan transferred their shares in Supermax to SHSB. In return, Thai ended up with 57.5% in SHSB while Tan had 42.5%.

It is learnt that before filing the winding-up petition last month, Tan had sought the return of the 441.2 million shares, which effectively make up her stake in Supermax, from SHSB. She also proposed that SHSB pay out the surplus funds and fixed deposits of more than RM162 million that it held.

“Tan felt that since SHSB cannot be an effective family trust vehicle, there was no reason for the company to hold surplus funds and her shares in Supermax. The funds should be declared out for the shareholders, who are Tan and Thai, for their own investments,” says a source.

However, nothing came of the request by Tan to return her shares in Supermax that are held by SHSB and for the private company to declare the funds as dividends. Hence, Tan felt that she was being deprived of her rights and benefits as a shareholder in SHSB.

“It subsequently resulted in Tan filing a winding-up petition against SHSB,” says a source.

When contacted, Tan declined to comment.

Thai, when contacted, says SHSB was set up to establish a family trust for their three children and their future generations and hence would resist any application to wind up SHSB.

“SHSB was set up with the sole purpose and intention of establishing a family trust for our three children and their future generations. Both of us jointly and wholeheartedly agreed to this set-up and maintaining this as the fundamental and exclusive aim of SHSB is a priority.

“We are both in our 60s. It makes perfect sense to have a family trust, especially since surviving the Covid-19 pandemic. When we both die, neither one of us will bring this wealth or any tangible assets.

“I will resist any application to change that purpose and objective,” says Thai in a text message reply.

To a question, Thai says the winding-up petition against SHSB would not have any impact on Supermax.

“This transfer and set-up of SHSB was designed to have no effect on the shareholding structure of Supermax,” he says in a reply.

Before 2018, the shares were held by Thai and Tan in their respective names. Both also held executive positions on the board of Supermax then.

At the moment, although Thai and Tan hold their shares in Supermax through SHSB, the voting rights are held individually based on their effective interest. It is evident based on the voting trend in shareholder meetings.

For instance, in the 2022 shareholders’ meeting of Supermax, the proposal to implement a long-term incentive plan (LTIP) was approved. But several proposals to specifically award the LTIP shares to family members related to Thai and his wife were rejected.

Thai, Tan and their daughters, Cecile Jaclyn Thai and Aurelia Joie Thai, were supposed to be part of the senior management team that would be awarded the LTIP. However, the resolutions to award the LTIP to Thai, Tan, Cecile Jaclyn and Aurelia Joie were rejected.

The major blocks of shares in Supermax are only held by Thai and Tan.

Based on the voting pattern, it appears that the husband and wife voted against each other, resulting in the resolutions involving the family members not being carried through.

Cecile Jaclyn joined the board of Supermax in 2018. This was the period after her parents stepped down from the listed company subsequent to Thai being found guilty of insider trading in 2017.

To recap, Thai and Tan were charged with insider trading in 2014. Thai was found guilty in 2017 and faced a five-year jail sentence with a fine of RM5 million. However, the charges were overturned in September 2020.

Thai returned to the board of Supermax as executive chairman while Tan was barred from holding any board position for five years. The ban ends next year.

Matters between Thai and his daughter came to a head in 2023.

Cecile Jaclyn resigned from the board in April 2023, citing differences with its members. Among the matters she raised was the company purchasing a private jet for her father’s use, which she felt was not in its best interest.

Several months after Cecile Jaclyn’s abrupt resignation, Supermax appointed several new directors as a move to shore up the governance.

Supermax was one of the biggest beneficiaries of the pandemic. The company is sitting on a cash pile of RM1.6 billion and has borrowings of just above RM80 million. It is in the process of expanding its operations in the US, which it feels has potential.

According to an executive familiar with the operations, Thai believes that expanding in the US would pay off because it would mean Supermax being closer to the world’s biggest glove consumer, which is the US health authorities. 
 

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