Chinese investor demands removal of ASA board
RICH Pro Investments (RPI), an investment company owned by China’s Zhejiang Hailiang Co Limited, is pushing for the sacking of the current ASA Resource Plc board once the modalities around its cash offer are concluded.
The investment company owned by Chinese businessman Mr Feng Hailiang, recently made a takeover bid of the resources group.
RPI has already indicated its willingness to avail $40 million of new financing to ASA at an interest rate of 5 percent per annum for the settlement of its outstanding creditors, subject to the ASA board being reconstituted and other standard terms and conditions.
The Chinese investment company announced that its cash offer, which remains subject to terms and conditions set out or referred to in the offer document posted to ASA shareholders on July 25, 2017, is extended to and will remain open for acceptance until August 29, 2017.
“RPI reiterates its previously stated intention to seek the immediate resignation of, or procure the termination of appointments of, the current ASA board, and to investigate whether any actions taken by current or past directors of ASA are in contravention of applicable laws or regulations or their duties to ASA, including, but not limited to, the conduct of the ASA board throughout the offer period and specifically in relation to the appointment of the administrators by the ASA board,” said RPI.
RPI said it is worried by the fact that ASA did not publicly announce material details of the reasons that caused the ASA board to put the resources group into administration.
RPI had previously expressed concern that the value of its and many other ASA shareholders’ investment is unlikely to recover without significant change to the management and strategy of ASA, supported by significant financial resources which would need to be made available to ASA on favourable terms.
RPI currently holds under three percent of ASA but this rises to 15,7 percent when the cash offer is concluded.
RPI has publicly offered to provide financial support to ASA, even following the appointment of the administrators. “RPI believes that these terms were significantly better than any other financing options available to ASA and a significantly better alternative than destroying shareholder value by the forced sale of ASA’s assets at a time of weakness. RPI remains willing to provide such finance and will continue to try to work with the administrators to assist ASA,” said RPI.
RPI noted the announcement made by ASA on July 28, 2017 that the ASA board has appointed Mark Skelton and Trevor Birch of Duff & Phelps Ltd as joint administrators of ASA was not in the best interests of ASA shareholders, its creditors or its other stakeholders and is yet another example of the poor management that has characterised the ASA board’s stewardship of ASA and the company’s continued decline.
RPI added that the ASA board failed, at any point since RPI’s first approach to the ASA board on June 16, 2017, to engage with RPI with regard to its repeated offers to provide financial support to ASA.
Instead, during this period, the ASA board took steps which RPI considers are not in the best interests of ASA shareholders, its creditors or its other stakeholders, such as requiring, in the context of discussions for a recommendation of the offer, that certain members of the ASA board would not be removed for an extended period following the offer becoming or being declared unconditional.
The current ASA board is headed by Mr David Murangari with Mr Toindepi Muganyi being the interim chief executive.