No stone unturned

THIS coming Tuesday, Stone Master Corp Bhd, a financially troubled marble-and-granite producer, will hold an EGM to decide the fate of the company’s managing director (MD) and one of the executive directors.

An executive director/vice-president of the company, Lee Fong Yin @ Lee Vun Ya, called the EGM to ask shareholders to vote for the appointment of eight directors and the removal of two others – MD Datuk Koh Mui Tee and executive director Datuk Lee Hwa Cheng.

Fong Yin is the largest shareholder in the company with a 22.29% stake while Koh and Hwa Cheng do not appear to have any shares in the company. The other major shareholders who also sit on the board include Datuk Eii Ching Siew @ Yii Ching Siew, an executive director/president of the company with a 9.45% stake and Datin Chan Chui Mei, who holds an indirect 5.4% stake through Starfield Capital Sdn Bhd, a private equity firm. She is the deputy MD.

Besides these shareholders, two other substantial shareholders, HR Land Sdn Bhd, which holds a 5.63% stake and Ng Siau Men, who has a 5.55% stake, have appeared on the latest list of substantial shareholders. Both these shareholders were not on the list of substantial shareholders in the annual report for the financial year ended Sept 30, 2016 (FY16).

Stone Master caught the market’s attention back in late 2015 when the company signed a series of agreements with major property developers in the country offering them building-finishing material products and services from China on an interest-free basis. The total amount of financing it agreed to provide stood at well over RM3bil. Developers only need to repay after completing their projects.

What is interesting is that the company had to sign agreements entailing the payment of one-time agency fees to various Chinese parties for the exclusive rights of distributing their products here. In lieu of cash, shares would be issued for the payment.

Not much have been heard about the financing scheme since then although there have been some inkling in the FY16 annual report that the substantial shareholders opposed the agreements entered into with the Chinese parties, which could have stalled the implementation of the scheme.

To be noted, Chan faces a suit from the Securities Commission filed last October for allegedly causing wrongful loss to the company.

Apparently, in consideration of the exclusive right to distribute the products of the Chinese companies, certain local representatives were paid a sum amounting to RM11.59mil in the form of a non-refundable deposit, of which RM11.54mil was subsequently paid by these local representatives to Chan, who is still a member of the board.

With such a controversy behind the company, it is strange why key officials are subject to being removed from the board.