No IJM board disharmony
Tan says it is united on the purchase of Scomi stake
PETALING JAYA: IJM Corp Bhd’s board was united on its acquisition of the stake in Scomi Group Bhd, its executive deputy chairman Tan Sri Krishnan Tan said, brushing off any talk of disharmony at the board-level as “irresponsible”.
“Let me be very blunt. (The speculation) created a thriller out of a non-event. Basically the four non-executive directors decided, for governance reasons, that they don’t want to participate in the employee share option scheme (Esos). Full stop,” he said after the company’s EGM.
“There is no disagreement on the board as far as the (Scomi) acquisition is concerned. They were fully behind this transaction and it has proceeded. Anything else, to me, is not true.
“The non-executive directors wanted to avoid conflict of interest. It is as clear cut as that. They did not reject the scheme, only their entitlement to it. And there is no split among the directors. The decision was looked at very carefully.”
According to stock exchange filings on Wednesday, the non-executive directors had refused their portion of the scheme which would have allowed them to subscribe up to a maximum of 100,000 IJM Corp shares from time to time.
IJM had initially proposed to extend the Esos to them, but upon being notified “of their wish not to avail themselves to the proposed Esos, the board has decided for the proposed resolutions to be withdrawn,” the firm said.
The non-executive directors who qualified for the Esos included chairman Tan Sri Abdul Halim Ali, Datuk Lee Teck Yuen, Datuk David Frederick Wilson and Datuk Goh Chye Koon.
However, shareholders passed the resolution at the meeting yesterday.
To recap, IJM had on Sept 24 surprised the market by announcing it was buying a 25.08% interest in oil and gas (O&G) and transportation firm Scomi for RM149.3mil via the subscription of 10% of new shares in the latter for RM39.3mil alongside RM110mil worth of redeemable convertible secured bonds.
The move caused IJM shares to plummet 11% to RM4.53 but Scomi rallied on the perception it was receiving a bailout from a respected and well-established name.
IJM has since recovered to RM5.05, while Scomi finished three sen higher yesterday at 41.5 sen on 72.6 million transactions for a 48% return year-to-date.
The acquisition was expected to be completed by year-end pending regulatory and shareholder approvals, Tan pointed out.
On why IJM chose Scomi as its partner, he replied: “Our intentions have been clearly expressed. We are taking a position in a sector (O&G) which will see very strong growth over the next decade or so in the home market as well as in the region.
Scomi thus gives us a good entry into the sector without having to start from zero.
“For the moment it is a strategic stake. We will work together on other aspects of O&G as we see fit or on the engineering side.
“It (the deal) was amicable. It was not like we pounced on something. There was the feeling that we could mutually add value.”
An official close to the company also told StarBizWeek that this was not an overnight decision as IJM had been contemplating getting back into O&G for some time after it exited the business in 2007 with the sale of its fabrication yard to Kencana Petroleum Bhd.
Asked why IJM had not sought instead for a joint venture (JV) with Scomi, Tan said: “Our specialisation is on the civil side and Scomi already has a fairly good track record in marine logistics and drilling fluids. In those areas there is no need for them to JV with us. It (equity) is an easier way to collaborate.
“This is an early entry. The possibilities are there and we have to develop it. We think Scomi has gone through a bad patch but they are out of it, so we can ride on their turnaround.”
IJM, Tan added, had already identified its board member for Scomi but declined to reveal who, saying only that the appointment would be made soon.
The company will have a representative each in Scomi’s three listed entities – Scomi Group, Scomi Marine Bhd and Scomi Engineering Bhd.