By Mak Yuen Teen
Note: This is a preliminary response to the company’s announcement on January 30, 2018. A more detailed response may be provided after I have gone through all the company’s recent announcements.
Datapulse Technology’s latest general update on January 30, 2018 states: “Although the share purchase agreement for the Acquisition was signed one day after the Board’s appointment, in actual fact, Board members were already introduced to the vendor of Wayco Manufacturing (“Vendor”) and furnished with information relating to, amongst others, the past financial performance of Wayco Manufacturing and the list of trademarks held by Wayco Manufacturing about two weeks prior to their appointment to the Board, so they did have sufficient opportunity to review and consider before deciding to undertake the transaction.” It also says: “… although the Vendor and its shareholder was introduced to the Board by Ms Ng and Ms Ng was of the view that Wayco Manufacturing was a suitable target for investment by the Company, the Board did not form its decision to make the Acquisition (or the terms on which it was made) purely based on the direction of the controlling shareholder, but took into consideration the interests of the Company and Shareholders.”
The company’s December 14 response to my December 13 Business Times article said: “Mr Low (the Chairman) was introduced to Ms Ng by a third party as a possible candidate for independent Director and Chairman of the Board, and prior to his appointment to the Board, was not acquainted with Ms Ng nor with the other New Independent Directors.” Mr Low was appointed to the Board on December 11.
So, Ms Ng introduced the vendor to the Board some two weeks before the Board was appointed, the Board was furnished information then, had sufficient opportunity to review and consider the acquisition, but Mr Low was not acquainted with Ms Ng and the other board members until he was appointed to the Board on December 11? So, the Board did all that without Mr Low (who is the Chairman) having been acquainted with Ms Ng or the other board members before December 11? Was Mr Low as Chairman discussing the possible Wayco acquisition introduced by someone he did not know, in cyberspace with future board members he did not know? And then the day after he was appointed, he was ready for the company to spend $3.5 million on the acquisition when he only finally “got acquainted” with Ms Ng and the other board members for the first time the day before. So, this is considered having done due diligence? Or would the company now want to clarify when Mr Low actually first got acquainted with Ms Ng and other board members?
In the same December 14 response, the company also said: “In relation to the comment made by Ms Ng in her letter of 29 November 2017 to the then board of directors which was disclosed in the Company’s announcement of 8 December 2017, the Board is not in the position to speculate as to what may have been the information in the possession of, or assumptions made by Ms Ng which led her to state in her letter, inter alia , “… the Company will be ceasing its manufacturing business soon……” . Now the company has said that the Board already knew about the proposed Wayco’s acquisition some two weeks before they were appointed – that is, before November 29. So in the December 14 response, why did the Board say that it was not in a position to speculate about what Ms Ng knew or assumed, rather than disclose then what it is saying now?
This reminds me of the company’s earlier response to my questions about the appointment of the current Board. Initially, it was “the then Board” that made the appointment of the new directors, and then it later said that it was actually only the three executive directors who did it. Is this the kind of disclosures that shareholders and regulators should accept from the company and the Board?
Regulators need to look into all the company’s disclosures. Further, now that it has been revealed that information about the proposed Wayco acquisition was already known to some directors and the new controlling shareholder some time before the new Board was appointed and before the acquisition was first announced on December 12, regulators should certainly look even more closely at whether certain individuals traded in the company’s shares while in possession of material non-public information.
