NatSteel : clash of the Titans - reveal Corp excesses ?
Atobe
NatSteel Corp has its majority shareholder in 98 Holdings - which include Temasek Holdings as a shareholder - as well as a hostile bedfellow in Mr Oei Hong Leong, who owns 30% share of the company.
From a recent report in the Straits Times, 1 August 2006, Tuesday - the makings of another "clash of the Titans" is about to break open :
Oei may call for NatSteel to be wound up "Shareholders have not received their fair share of the reserves."
MR OEI HONG LEONG, in a letter from his legal team to the NatSteel board, expressing concern about the company's huge cash pile, which he wants to distributed to shareholders
BY LEE SHU SHYAN - Companies Correspondent
ONE of the most bitter corporate stand-offs in years has moved up a notch, with tycoon Oei Hong Leong saying that he may call for NatSteel - the firm he tried and failed to buy - to be wound up.
Mr Oei has several concerns about the board's performance, including the company's huge cash pile, which he wants distributed to shareholders.
Unless he gets a satisfactory reply by Friday, he could start the costly and lengthy process of asking the High Court for a winding up order. Winding up would result in the company's asets of about $500 million being sold and the proceeds distributed to shareholders. Mr Oei, with about 30.02 per cent, would reap about $150 million.
In a letter from his legal team to the board, sent last Friday, Mr Oei outlined his reasons. He saidNatSteel had sold off its core business but was still spending large amounts on administration. And while it had yet to buy a new business, its cash hoard of about $250 million sat idle while investors went without dividends.
"Shareholders have not received their fair share of the reserves," he said in his letter.
A winding up would spell the end for one of Singapore's pioneering firms and bring the curtain down on what has become an increasingly acrimonious saga involving Mr Oei, NatSteel executive director Ang Kong Hua, and hotel tycoon Ong Beng Seng, who holds the controlling share.
It began with a 2002 management buyout bid by Mr Ang. This failed and triggered a takeover battle, in which a consortium called 98 Holding, led by Mr Ong, beat Mr Oei for control.
After the steel business was sold last year to India's Tata Steel, NatSteel tried to change its name to NSL, but Mr Oei vetoed the move on the grounds that the name was an iconic one.
Then, last month, Mr Oei tried to take control of NatSteel, but he needed 98 Holdings to sell him a stake in order to get his share above 50 per cent. But the firm did not budge.
One of the complaints outlined in Mr Oei's letter last week was that NatSteel has no clear strategy.
The bulk of its profits come from a passive investment in a Thai petro-chemicals company.
Its March 31 results revealed a cash pile of $179.9 million raised from selling Banyan Tree shares at its recent IPO.
Mr Oei also pointed out that NatSteel had spent $7.9 million on administrative expenses for the first quarter this year - even though there is little business to manage.
The company's "activities are focused on asset disposal so as to realise as much cash as possible, yet it chooses to retain a substantial amount of cash which should rightfully be distributed to all shareholders".
NatSteel, formed in 1961 to support Singapore's construction boom, was the country's only steel producer and the first company to build a factory in Jurong.
At its height in the 1980s and early 1990s, with interests in electronics and property, it had a market capitalisation of $1.5 billion.
The NatSteel board could not be contacted for comment.