Wednesday 13 January 2016

HeveaBoard responds to accusations

It is not often that a listed company reacts on allegations from an unofficial source, but that is exactly what HeveaBoard did.

The Bursa announcement can be found here, the allegations as published on the i3investor website here.

Some snippets, with comments by me in red.

The contents made in those articles are untrue, defamatory and malicious in nature.

Does "The contents" refer to all contents, or only some (if so, which ones)?

The civil suit (“Suit”) filed in the High Court of Malaya in Seremban (“Seremban High Court”) in September 2014 is a suit brought under Section 181 of the Companies Act 1965 by the minority shareholders of HeveaWood Industries Sdn Bhd (“HeveaWood”) against the majority shareholders of HeveaWood (i.e. Yong Kian Seng @ Yoong Tein Seng, Yoong Hau Chun, Tenson Holdings Sdn Bhd, Firama Holdings Sdn Bhd and HeveaWood Industries Sdn Bhd). The minority shareholders alleged that they have been oppressed by the majority shareholders, and non payment of dividends by HeveaWood was one of the allegations made. On a separate note, the Company had not paid any dividends during the financial years ended 2009 to 2012 due to its financial position during that period of time. 

HeveaWood should not be confused with the Company. HeveaWood is a substantial shareholder of the Company and is a private limited company.  

This Suit had been decided by the Seremban High Court in favour of the majority shareholders. The minority shareholders have subsequently filed an appeal against the decision of the Seremban High Court.  

As the Suit does not involve the Company and is at the shareholders’ level, it is a private matter and there is no legal requirement for the Company to make any announcements to Bursa Malaysia Securities Berhad on the same. The Suit has no bearing on the governance of the Company.

That last sentence might be right from a legal point of view, but if the parties involved in HeveaWood are (substantially) the same who run HeveaBoard, then minority investors of HeveaBoard might be quite interested in this suit and the outcome of it.

As for the allegation of 700 containers of the Company being stranded in a port in South Korea in October 2015 due to non-conformance of quality standards, the Company reiterates that this is untrue. The South Korean authority had changed its standard of panel products from E2 boards to E1. As South Korean E1 testing standards differed slightly, the Company had decided to delay its shipment to South Korea pending clarification on new testing standards applicable to its products. As of to-date, this matter has been resolved.

Does that mean that 700 containers were indeed stranded and have now been processed?

In respect of the allegation of ingenuity accounting in that there were discrepancies between the amounts owed by related parties to HeveaWood and the amounts owed by the Company to related parties, the Company understands that in addition to the amount owing by the Company to HeveaWood, there are other amounts due from other related parties to HeveaWood. Hence, the alleged discrepancies. The amount owing to HeveaWood by the Company is intended to be repaid in 2016.

".... there are other amounts due from other related parties .....", that sounds very vague, was this not the right moment to clear the air regarding this matter, once and for all?

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