THE tussle for control of loss-making Artroniq Bhd (previously Plastrade Technology Bhd) is heating up as the group’s substantial shareholder and former managing director Tee Yen Chong and Fortune Biotech Supply Sdn Bhd have filed an injunction against the 10% private placement announced by the company on April 14.
This confirms our report on April 7 that a shareholder tussle could be brewing at Artroniq following the rejection of a proposed private placement of up to 86.7 million new ordinary shares or not more than 30% of the issued shares in the company to independent third party investors on March 18.
In a filing with Bursa Malaysia yesterday (April 19), Artroniq said it has received a notice calling for an extraordinary general meeting (EGM) for the removal of existing board members and the appointment of new board members.
Among others, the said notice called for the removal of Steven Wong Chin Fung, Choy Eng Lun, Tan Tian Wooi, and Lam Kwan Siew as directors of Artroniq. Instead, the notice called for the appointment of Rahimi Ramli, Andrea Huong Jia Mei, Tan Teck Khong and Chin Yew Thong as the directors for the company.
All the proposed directors have given their consent to act as directors with immediate effect and confirmed that they are not disqualified from being appointed as directors under the Companies Act 2016.
A source who is familiar with the ongoing tussle at Atroniq said yesterday’s notice will set the stage for the control of the loss-making company.
Moreover, this could lead to further investigation into some of the previous corporate actions undertaken by the management, including the RM12 mil acquisition of EA Comtronix Sdn Bhd in early 2020.
At a price-to-earnings valuation of 8.0 times, the purchase consideration of RM12 mil appears to be expensive given its historical track record, according to the source.
“The EGM will alert the regulators on some of the issues in terms of corporate governance within Artroniq,” the source told FocusM.
“This event may lead to reports being made against the board and management of Artroniq which could lead to an investigation into some of the alleged mismanagement within the company.”
EA Comtronix is principally involved in the supply of computer hardware, peripherals and accessories such as computer hardware products, telecommunication devices and accessories, namely printer, mobile phones, ICT gadgets, laptops, desktops, projectors and other related consumables such as ink, toners and ink cartridges.
While the acquisitions come with a net profit guarantee of not less than RM1.5 mil annually for both FY2020 and FY2021, EA Comtronix’s pre-tax profit margin is not even at 1%.
In fact, the company’s historical net profit only ranges from RM200,000 to RM500,000 during the financial year ended Dec 31, 2016 (FYE2016) and FYE2018.
Atroniq made headlines on March 5 when it was issued with an unusual market activity (UMA) query by Bursa Malaysia after the quiet counter shot up to RM1.08 with a volume of 61.32 million shares on March 5.
However, its share price has since languished, declining to a four-week low of 37 sen on March 31 prior to hovering at the 45-50 sen range in recent times.
Elsewhere, the source also questioned the rationale behind the company’s delay in announcing the current injunction notice as well as the rejection of the original private placement exercise during its EGM on March 18 only for another proposed 10% private placement to be made a few days on March 24.
Additionally, the source also expressed concern over the management’s capability to lead the group given that it is led by its current CEO Leong Seng Kin who has been declared a bankrupt since Aug 8, 2011.
“I think the management’s strength is questionable given that it is led by someone who suffered a personal financial struggle that has led to bankruptcy. It is important that a new board is being appointed to look into some of these issues to ensure no foul play is involved,” justified the source.
Under the leadership of Leong and the current board of directors, the group’s net loss has widened to RM11.8 mil for the financial year ended Dec 31, 2020 as compared to a net loss of RM2.23 mil in the previous financial year.
“Now the shareholders have the right to put a stop to the losses incurred by the current management with the forthcoming EGM being a turning point for the group to re-invent itself,” added the source.
At 4.45pm, Artroniq was down 1 sen or 2.13% to 46 sen with 3.02 million shares traded, thus valuing the company at RM133 mil. – April 20, 2021
