Just what is going on at the construction group?
IT’S hard to fault investors of Kumpulan Jetson Bhd who are nonplussed by the events taking place at the company in recent months. The most recent has to do with the resignation of an independent director.
According to the company in its response to a query by Bursa Malaysia, three things had happened on July 7. The company had received Mohd Najib Abdul Aziz’s resignation dated July 7; it also received an email on the same day from him retracting the resignation. But here’s the clincher – the company still went ahead and announced the resignation.
Two days after that, the company announced that it had received another letter from Najib stating the resignation is invalid. However, the company had replied to Najib that the “resignation is valid and a subsequent retraction or change of heart does not change the resignation.”
Conclusion – was his a forced resignation? Could Najib have had a change of heart – all within a span of a day? Or could the board be split? Maybe. If it was a “friendly” board, perhaps there would have been no hurry to announce the resignation given the retraction.
What piqued the curiosity is the level of disclosure or lack thereof, particularly at a time when wary investors are demanding more transparency.
There was hardly any explanation why Najib, who has served the board for nine years as independent, non-executive director and chairman of the audit committee, and who had just a month ago offered himself to be re-elected at an annual general meeting, had resigned in the first place and what led to his retraction.
Even more puzzling is that on July 14, trading in the company’s shares was halted – for an hour. What for, you ask? This – to announce Najib’s retraction of resignation via fax and that the board had scheduled a meeting the day after to discuss the implications of this.
The market must have sniffed something amiss. The stock price plunged 22 sen or 17% that day upon resumption of trade, closing at its low of RM1.11. Then, puzzlingly, it rose again the next day by 44 sen or 40% on unusually heavy trading volume. Unlike in November last year, when Bursa Malaysia issued an unusual market activity query on the back of substantial exuberance in the counter, this time, there was none.
Bursa Malaysia did, however, request the company to make an announcement to clarify the circumstances surrounding the resignation of Najib. But even this failed to shed some new light except a response by the company that the lawyer appointed by the board to consider the various issues regarding Najib’s resignation was of the opinion that it was “properly executed” and is “valid”. Nevertheless, the board, it said, has unanimously agreed to seek a second legal opinion on the matter.
Just about a year ago (Aug 20, to be exact), the Naza brothers Sheikh Mohd Nasarudin and Sheikh Mohd Faliq through privately held Superior Pavilion Sdn Bhd, bought a 33% block from the company’s co-founders – Isnin Rahim (then chairman and executive director) and brothers Datuk Teh Kian Ann (group managing director) and Tee Keng Kok (executive director), among others.
Following that, in November, Nasarudin was appointed chairman and Faliq vice-chairman. Both are executive directors of Jetson. As they had crossed the takeover trigger point, a mandatory general offer was done but it flopped because the stock price, for some strange reason, had skyrocketed way above the offer price (70 sen which was later revised to RM1).
The thing is there has been very little taking place at the company which warrants the level of fervour the counter has been attracting. Except for this – in December last year, the Naza Group, through its wholly owned TTDI KL Metropolis Sdn Bhd tied up with Jetson to form a 51:49 joint venture to develop the Matrade Centre, the country’s largest exhibition centre. Jetson will get the contract to develop the Matrade Centre for RM628mil. But can the Matrade Centre project take off smoothly if the board is indeed split?
When the Naza brothers entered the company, investors deemed the development as a move to inject fresh blood (and with that, fresh jobs) into the company. After Matrade, they could still be waiting for more to happen.
In the works is a plan to improve the governance benchmark of listed companies. Bursa Malaysia has proposed to amend its listing requirements and introduce a Corporate Disclosure Guide. One of the proposed measures includes listed companies disclosing reasons for the resignation or change of directors. There’s been a lot of that going on in the local bourse of late.
If only these measures had come together much sooner…
● Business editor Anita Gabriel wonders what’s going on at our stock exchange. Just far too many puzzling developments.
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