Secret tape recording twist to Harvest Court tussle

KUALA LUMPUR: Harvest Court Industries Bhd's boardroom tussle took another twist yesterday when CEO and managing director Datuk Raymond Chan Boon Siew played back what he said was a recording of a conversation in which Datuk Eddie Chai Woon Chet admitted that he had a block of up to 34% share in the company, of which he is seeking control.
Chai, who was not aware of the recording, said he had a share of up to 34% in Harvest Court.
"It's approximately 33% or 34%, around there. If you dilute it a bit then I will add in a little tomorrow," Chai told Chan, who failed to get re-elected as a director at the company's recent AGM, when they met on May 14 this year.
This contradicts Chai's denial to the media in a press conference on June 16, 2014 that he had a controlling stake in Harvest Court. According to the listing requirements, a shareholder must make an MGO when its shareholding hits 33%.
In the recording, Chai also said he was supported by Kenneth Vun, another shareholder who holds a stake of more than 10%, contradicting what he told the press last month that he was not teaming up with Vun.
Thus far, Chai has given the impression that Harvest Court has defamed him, and has filed a lawsuit to that extent.
"In this case, it is either he is lying or I am lying. But I have on recording, Datuk Chai clearly stating that he has 33% or 34% of Harvest Court shares," Chan said.
When contacted by SunBiz, Chai denied he had mentioned to Chan that his shareholding in Harvest Court exceeded 33%.
"I don't know what are they (Harvest Court) are doing right now, I did not say this before," he said, adding that he needs to consult his lawyer for further action.
Filings with Bursa Malaysia showed Chai, through his private vehicle, Zenith City Investment Ltd, held a 20.95% stake in Harvest as at June 30.
Despite receiving a notice from Zenith and Syawaras to convene an EGM on August 8, Harvest Court's lawyer Gideon Tan stressed that Harvest Court will not circulate the notice to shareholders as the move has breached the takeover code.
Harvest Court said it filed a suit last Friday against Chai, Zenith and 32 other for breaching Section 9(1) of the Malaysian Code of Take Over and Mergers 2010 without first making an MGO to Harvest Court shareholders.
According to Chan, who holds a 7.05% stake in Harvest Court, the company's registered office received a bundle of 4,800 pieces of notice of meeting and an instruction to circulate the notice to shareholders last Friday.
"It would appear that Chai is not taking the proper steps that are in compliance with the law in his attempt to convene this EGM. He is forcing his way in with no regard for other shareholders.
"If the board of directors of Harvest cooperated and allowed him on the board, we would be a party to breaching the takeover code, and not acting in the interest of other shareholders," Chan said.
Zenith asked for the list of shareholders on July 4 and Harvest Court has 21 days to respond but it will not act on the request.
The resolutions to be put at an EGM seek the removal of chairman Datuk Mohamed Amir Abas, executive director Ng Wai Han and independent non-executive directors Zainuri Zainal and Woo Mun Chee and the appointment of three new directors – Datuk Seri Abdul Azim, Wong Kwai Wah and Chai himself.
It's notable that all six resolutions were not carried at Harvest Court's AGM last month.
Earlier, Chai said the move to remove the current directors was also due to the deterioration in the company's financial performance. He is looking to inject around RM1 billion property development and construction projects into Harvest Court if he gets control of the company.
Asked on Harvest Court's weak financial performance, Chan opined that the company could perform better if given more time to execute the business plans.
"Whatever he (Chai) said is a short-term result, we need to allow the medium- and long-term (plans) to take place before the results can come in, so it is premature to tell that we have losses in the short term, now he wants to come in," Chan said.
Chan is confident of turning around the company in the next 12 to 18 months, highlighting its clean balance sheet with no borrowings.
For the first quarter ended March 31, 2014, Harvest Court's net loss widened to RM1.3 million from RM816,000 a year ago, after it shut down its timber door section, and because of lower sales from the construction division.
Commenting on the suit filed by Chai against Harvest Court over its announcements made to Bursa Malaysia, Tan said the company will defend itself and seek to strike out the legal action.