NatSteel Corp has its majority
shareholder in
98 Holdings - which include Temasek Holdings as a shareholder -
as well as a hostile bedfellow in Mr Oei Hong Leong, who owns 30%
share of the company.
From a recent report in the Straits Times, 1 August 2006, Tuesday -
the makings of another "clash of
the Titans" is about to break open :
Oei may call
for NatSteel to be wound up
"Shareholders have not
received their fair share of the reserves."
MR OEI HONG LEONG, in a letter from his legal
team to the NatSteel board, expressing concern about the company's
huge cash pile, which he wants to distributed to shareholders
BY LEE SHU SHYAN - Companies
Correspondent
ONE of the most bitter corporate stand-offs in years has moved up a
notch, with tycoon Oei Hong Leong saying that he may call for
NatSteel - the firm he tried and failed to buy - to be wound
up.
Mr Oei has several concerns about the board's performance,
including the company's huge cash pile, which he wants distributed
to shareholders.
Unless he gets a satisfactory reply by Friday, he could start the
costly and lengthy process of asking the High Court for a winding
up order. Winding up would result in the company's asets of about
$500 million being sold and the proceeds distributed to
shareholders. Mr Oei, with about 30.02 per cent, would reap about
$150 million.
In a letter from his legal team to the board, sent last Friday, Mr
Oei outlined his reasons. He said NatSteel had sold off its core business but
was still spending large amounts on administration. And while it
had yet to buy a new business, its cash hoard of about $250 million
sat idle while investors went without
dividends.
"Shareholders have not received their
fair share of the reserves," he said in his letter.
A winding up would spell the end for one of Singapore's pioneering
firms and bring the curtain down on what has become an increasingly
acrimonious saga involving Mr Oei, NatSteel executive director Ang
Kong Hua, and hotel tycoon Ong Beng Seng, who holds the controlling
share.
It began with a 2002 management buyout bid by Mr Ang. This failed
and triggered a takeover battle, in which a consortium called 98
Holding, led by Mr Ong, beat Mr Oei for control.
After the steel business was sold last year to India's Tata Steel,
NatSteel tried to change its name to NSL, but Mr Oei vetoed the
move on the grounds that the name was an iconic one.
Then, last month, Mr Oei tried to take control of NatSteel, but he
needed 98 Holdings to sell him a stake in order to get his share
above 50 per cent. But the firm did not budge.
One of the complaints outlined in Mr Oei's letter last week was
that NatSteel has no clear strategy.
The bulk of its profits come from a passive investment in a Thai
petro-chemicals company.
Its March 31 results revealed a cash pile of $179.9 million raised
from selling Banyan Tree shares at its recent IPO.
Mr Oei also pointed out that
NatSteel had spent $7.9 million on administrative expenses for the
first quarter this year - even though there is little business to
manage.
The company's "activities are focused
on asset disposal so as to realise as much cash as possible, yet it
chooses to retain a substantial amount of cash which should
rightfully be distributed to all shareholders".
NatSteel, formed in 1961 to support Singapore's construction boom,
was the country's only steel producer and the first company to
build a factory in Jurong.
At its height in the 1980s and early 1990s, with interests in
electronics and property, it had a market capitalisation of $1.5
billion.
The NatSteel board could not be contacted for comment.