Bookmark & Share
Youcan is a Chinese company listed in Singapore. It develops, makes and distributes ice cream and frozen food products under its own brand.
In January, Youcan said its wholly owned subsidiary Youcan Foods Hangzhou had entered into an agreement to buy the land use and development rights of a new factory in Zhejiang province's Hangzhou city.
Mr Dai Tianrong - executive chairman and chief executive of Youcan - is considered an interested person in the transaction as he also owns 51 per cent of You Kang Foods Holdings, the company selling the factory premises.
If the sale had gone through, it would have seen Mr Dai receiving shares of Youcan in return, instead of hard cash.
Mr Dai owns around 44 per cent of Youcan, but he could not vote on the resolution yesterday as this is an interested party transaction.
For shareholders who gave the thumbs down to the deal at the firm's extraordinary general meeting, the proposed sale had raised an important question: Is it in their interests to acquire the land and property from Mr Dai, who has a significant interest in them, in the first place?
'For a CEO buying his own piece of land to put into his own company in exchange for shares at a depressed price is questionable,' said a shareholder who asked not to be identified.
'It's not in the interest of shareholders. Their stake gets diluted and the CEO sells the land possibly at a high price to the company.'
Youcan's chief financial officer and company secretary Jong Voon Hoo said the land costs 51 million yuan (S$11.2 million), while the factory when completed will cost 200 million yuan.
These values were not plucked from thin air, but came from an independent property valuer, he said.
Furthermore, the company had enlisted an independent financial adviser who advised its own independent directors on the deal. The information was then transmitted to its shareholders via an official circular, he added.
'We're finding alternatives to move this forward and we regret that shareholders are not for the resolution,' Mr Jong told The Straits Times yesterday. He declined to comment on the potential conflict of interest when asked.
Certainly, shareholders of Youcan are entitled to be cautious, especially after S-chips or Chinese listings here, have had their reputation badly damaged by news of accounting irregularities and breaches of loan covenants.
Many jittery investors have shunned the sector since late last year. In fact, many S-chips had failed to catch the coat-tails of the market rally in March.
Some of Youcan's largest shareholders are prominent people in Singapore, including former MP Chandra Das; 'Popiah King' Sam Goi, the executive chairman of Tee Yih Jia Food Manufacturing; and FairPrice chairman Ng Ser Miang.
Youcan shares closed at 10 cents yesterday, down sharply from a high of 38 cents in July 2007.
NO DEAL
'For a CEO buying his own piece of land to put into his own company in exchange for shares at a depressed price is questionable...It's not in the interest of shareholders. Their stake gets diluted and the CEO sells the land possibly at a high price to the company.'
A shareholder on the proposal from Youcan CEO Dai Tianrong
Search Property News
