Singapore Corporate News - 23 Jul 2007

Apex-Pal shareholders seek answers to Thai Village offer

AS the management of Sakae Sushi restaurant chain Apex-Pal International (API) meet with shareholders today, they can expect to take on probing questions relating to the takeover offer for Thai Village.

The outcome of this EGM will also be closely watched by Thai Village management and its shareholders, in the hope that API would clear the uncertainties surrounding the deal.

In January, API offered Thai Village's major shareholders 0.6 new API share for every one Thai Village share that they own. These include Thai Village managing director Lee Tong Soon and executive directors Lee Tong Kuon and Kok Nyong Patt - as well as 'Popiah King' Sam Goi's Tee Yih Jia Food Manufacturing Pte Ltd. Together they own 78.55 million shares or 37.8 per cent of the total issued share capital of Thai Village and had agreed to sell their stakes.

For the minority shareholders, they have the option of 20.1 cents in cash for each Thai Village share or a combination of 0.2 new API share plus 13.4 cents in cash. API later extended a third option in May for these shareholders to have a full share swop on similar terms as Thai Village's major shareholders.

This extension drew flak from the major shareholders, who fear a potential dilution of their eventual stakes. Earlier this month, the three Thai Village founders, as well as Mr Goi, decided to reverse their commitment to sell their stakes and applied for a court declaration to discharge such undertakings.

The decision was apparently made out of frustration with the lack of response from API chief executive Douglas Foo to emerging concerns about the deal despite repeated phone calls and e-mails.

One area of contention was API's 3.5-cent a share special dividend declared at its full-year results announcement in February, which resulted in a total payout of over $6 million. With API's cash hoard standing at just over $10 million, the firm is estimated to be left with just enough for its working capital.

Mr Foo had brushed off media queries on the issue as a misunderstanding, saying he has been uncontactable because of overseas business trips. But the more discerning shareholders may not take this for an answer.

What API shareholders may also be concerned about are the specific growth plans the company has in mind should the takeover offer get scuttled. Without the support of the major shareholders of Thai Village, the deal may not go through as it requires API to hold a minimum 50 per cent stake by the close of the deal to become unconditional.

In a circular to its shareholders, API said it is of the view that the offer is in the best interests of the company and recommends that API shareholders vote in favour of the resolutions.

But in this case, it is not the votes that matter since Mr Foo - who has an aggregate of 64.42 per cent of the total issued share capital of API - has on Jan 9, given an irrevocable undertaking to vote in favour of the offer at the EGM. The ordinary resolution of the takeover offer requires only a minimum 50 per cent approval.

Rather, shareholders are looking to him for the answers to the recent perplexities surrounding the deal.