MSWG: concerns regarding Multi Sports Holdings

Below article is from MSWG's latest newsletter dated August 21, 2015. The concerns regarding Multi Sports Holdings (MSHL) in the "MSWG's comments" section all sound very valid, nothing to add. It is puzzling why a company which claims to have cash worth RM 360 Million is not using this cash to extract value for its shareholders, through a share buyback program or dividend pay-out scheme.

MSHL had on 20 August 2015 held 2 special general meetings (“SGMs”) for the proposed variation to the utilisation of proceeds raised from the sponsorship of the Taiwan Depository Receipt Programme (“TDRP”) (“Proposed Variation”), proposed par value reduction (“Proposed Par Value Reduction”) and proposed establishment of employee share option scheme (“Proposed ESOS”).

The Proposed Variation was approved by the shareholders voted by a show of hands, whereby the Proposed Par Value Reduction and Proposed ESOS was approved by the shareholders voted by way of poll.

Result on voting by poll is shown below:

[Source: MSHL’s announcement on Bursa Malaysia’s website on 21 August 2015]

MSWG’S COMMENTS:

The venue of the SGMs had been changed (at the same resort but different meeting room) at the eleventh hour without immediate notification to shareholders of MSHL. MSWG’s representative felt that it was not right to have done so without providing prior information. The Board agreed to delay the meeting for 20 minutes and also apologised to shareholders for alteration of the venue, as they were informed that the alteration was made by the management of Putrajaya Marriott & Spa without prior notification to the company. Nevertheless, MSWG felt it was imperative that the change of venue should have been posted at the original venue.

During the meeting, the shareholders raised many queries pertaining to resolutions on the Proposed Par Value Reduction and Proposed ESOS, and eventually the resolutions were not carried by a show of hands. The acting Chairman called for a poll vote for all the resolutions before the announcement of the result which were eventually approved as stated above.

MSWG had voted against the Proposed Par Value Reduction, as the company should not be granted the flexibility to raise more funds given the fact that it could not utilise fully its previous proceeds raised from TDRP. MSWG also voted against the Proposed ESOS, as the exercise allows employees to subscribe up to 15% of the company’s new shares at a 10% discount to the 5-day weighted average market price and this would greatly dilute the interest of existing shareholders. The market price of MSHL was RM0.08 as at 20 August 2015, which was 0.08 times to the book value of the Group (the Group’s net asset value per share was RMB1.73 or approximately RM0.98).