Saturday, February 4, 2012

SC chief to quit amid row over E&O

SC chief to quit amid row over E&O

February 04, 2012
Malaysian Insider

KUALA LUMPUR, Feb 4 — Tan Sri Zarinah Anwar will step down as Securities Commission (SC) chief next month amid pressure over the market regulator’s role in Sime Darby’s acquisition of a 30 per cent stake in property group E&O last August, The Straits Times reported today.

According to the Singapore daily, Zarinah, the first woman to head the capital markets watchdog, will leave at the end of her contract, ending six years at the helm of the commission.

The Straits Times said government officials and financial executives close to the situation told the newspaper that “ Prime Minister and Finance Minister Najib Razak will decide on her replacement in the coming weeks.”

“The E&O deal has put Tan Sri Zarinah (picture) in a tight spot. The reason is that her husband, who is E&O chairman, had raised his personal stock holdings in the company just days before Sime Darby’s announcement,” it reported.

State-controlled Sime Darby purchased its 30 per cent interest from three major shareholders — E&O managing director Datuk Terry Tham, Singapore’s GK Goh Holdings and a group of investors led by businessman Tan Sri Wan Azmi Wan Hamzah — at the end of August last year in a deal that valued E&O shares at RM2.30 a piece.

The purchase price represented a 60 per cent premium over the value of the shares in the company on the open market when the deal was announced.

The RM776 million deal triggered unease over the widely perceived coddling by the agency of large state-controlled companies at the expense of minority shareholders when exercising its authority on corporate takeovers.

The SC ruled six weeks after the deal that the plantation-based conglomerate did not have to make a general offer, prompting E&O minority shareholder Michael Chow to sue the SC for failing to compel Sime Darby to make a general offer for the rest of the shares, which would cost an additional RM1.8 billion.

This came despite a SC task force finding that Sime Darby was obliged to make a general offer for E&O shares after acquiring a 30 per cent stake in the property developer.

Singapore’s The Straits Times reported last week that the task force was of the view that a general offer obligation had been triggered as a new “concert party” was created between Sime Darby and Tham, who jointly controlled more than 33 per cent in the property concern after the deal.

Malaysia’s takeover rules stipulate that any party that acquires more than a 33 per cent interest in a public listed entity must carry out a general offer for the remaining shares.

A general offer can also be triggered if a new party buys less than 33 per cent, but secures management control of the target company.

The Straits Times also reported today candidates to replace Zarinah include deputy central bank governor Datuk Muhammad Ibrahim and the SC’s managing director Datuk Ranjit Ajit Singh.

It also said that Datuk Johan Raslan, executive chairman of PricewaterhouseCoopers, has repeatedly turned down the offer to head the watchdog agency.

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