Koh Brothers Group has declined to put forward a resolution requested by certain shareholders agitating to receive the distribution of Oiltek International shares that KBG holds indirectly.
According to KBG on March 25, a group of shareholders had asked KBG to include at its upcoming AGM a resolution to make subsidiary Koh Brothers Eco Engineering distribute shares it in turn holds in Oiltek International.
Oiltek, as indicated in its FY2024 annual report, is 68.14% held by Koh Brothers Eco Engineering, which in turn is 54.81%-held by Koh Brothers.
Lifted by a string of contract wins, Oiltek shares have gained nearly 200% year to date, extending a gain of 2,500% in the past five years.
At April 13 close of $2.08, Oiltek is valued at $892.3 million. In contrast, KBE and KBG are valued at $356.5 million and just over $162 million respectively. In short, KBG's effective stake in Oiltek is now worth twice its own market cap.
In a filing on April 13, KBG says the requisitioned resolution was the same was that proposed by the same shareholders ahead of its previous AGM on April 29.
In its filings last year, KBG identified the shareholders as Morph Investments, Ong Sze Wang, Chin Phak Lin, who back then were said to control around 21 million shares between them.
KBG maintains that the requisitioned resolution "are matters which fall within management decisions and which come within the remit" of KBG's board.
KBG says the decision last year to let shareholders vote on the resolution was "on an exceptional basis to promote open engagement with shareholders, and was expressly qualified as such."
See also: EDIS ceased to be substantial shareholder of Addvalue Technologies
The resolution did not pass with 42.16% for and 57.84% against.
KBG says its board has considered the matter further and determined that it is not in the best interests of KBG to implement the proposal set out in the requisitioned resolution.
KBG says it has considered, among others, that the current operating environment remains uncertain and volatile, the financing arrangements of KBG, the potential effects on the financial position of Oiltek, KBE and itself, as well as the ability to direct the strategy and future growth of Oiltek.
"Nevertheless, the board thanks the requisitioned shareholders for their feedback", says KBG.
