KUALA LUMPUR (Oct 25): BT Capital Investment Ltd is contemplating proceeding with its suit against ILB Group Bhd and its board of directors to block the purchase of commercial land, despite the fact that the transaction was already called off.

In a statement on Tuesday (Oct 25), BT Capital Investment, a minority shareholder in logistics company ILB, said it considered going ahead with the suit as it claimed that the actions and conduct of ILB’s directors in the past month did not show that they upheld their duty of care and acted in the best interest of shareholders.

This was because ILB’s board had tried to execute the acquisition, which dilutes the stakes of existing shareholders using the 20% general mandate that was intended to improve cash flow, boost liquidity and working capital, and misled minority shareholders by not announcing material information immediately, said the company.

In April 2020, Bursa Malaysia increased the general mandate for private placement to 20% of a company’s issued share capital, from 10% previously. The general mandate has been extended by 12 months until Dec 31, 2022.

BT Capital Investment said it was concerned that ILB can still go ahead with the transaction, or other transactions that could dilute the stakes of minority shareholders and infringe their interest, using the mandate.

Thus, it had filed a second originating summons (OS) on Oct 17, which complains, among others, that ILB’s board is oppressive in blocking an extraordinary general meeting (EGM) requisitioned to revoke the general mandate approval given by shareholders at ILB’s annual general meeting on April 26.

“Any attempt to dilute the shares of minority shareholders is tantamount to oppressive conduct. To protect the interest of minority shareholders like us, we have to consider continuing legal recourse to compel ILB to convene an EGM to present their proposed utilisation for the 20% general mandate and potentially for shareholders to rescind the mandate given to ILB’s board of directors,” said BT Capital Investment.

The first OS was struck out by the Shah Alam High Court. According to the company, it was due to technical grounds of locus standi (legal standing). “BT Investment Capital has addressed the locus standi technicality by transferring its shareholding of ILB to its own account instead of a nominee account in UOB Kay Hian Nominees (Asing) Sdn Bhd on Oct 14,” it said.

The company noted that ILB had not yet announced that it had been served a second OS before it told Bursa Malaysia that the deal had been aborted.

“This is in defiance of the Bursa Malaysia Main Market Listing Requirements which oblige listed companies to announce material information immediately. The deliberate non-announcement appears to be an attempt to conceal information to the bourse and public,” said BT Investment Capital.

On Oct 20, ILB announced that it had terminated its planned purchase of 1,124 sq m of freehold commercial land with shoplots in Petaling Jaya, Selangor, for RM15.9 million.

The group and Impian Nuri Sdn Bhd mutually agreed to not proceed with the deal, after a condition precedent was not fulfilled by the Oct 31 deadline.

The condition precedent was Bursa Securities’ approval of ILB’s additional listing of 37.78 million new shares which was to be used as part of the purchase consideration for the land acquisition, at an issue price of 42.11 sen per share.

ILB had submitted the application for the listing of the shares to Bursa Securities on July 7, but decided to withdraw the application on Aug 8 after it decided to resolve litigation matters, which included seeking a declaration that the EGM requisition notice was invalid.

At the noon break, ILB shares were unchanged at 53 sen, giving it a market capitalisation of RM103.36 million.