16/6 The SC has obtained an injunction to refrain Datuk Ishak Ismail from dealing with the RM 10.2 m proceeds from recent Kenmark shares sale.
16/6 The SC said the court has also asked Datuk Ishak Ismail to furnish details of all his assets locally and abroad within four days.
Thursday June 17, 2010
SC gets injunction against Ishak
By B.K. SIDHU
bksidhu@thestar.com.my
PETALING JAYA: In an unprecedented move, the Securities Commission (SC) obtained an ex parte injunction to refrain Datuk Ishak Ismail from dealing with the RM10.2mil worth of proceeds he got from the sale of his shares in troubled furniture maker, Kenmark Industrial Co (M) Bhd.
This is the first such case where the SC acted to prevent dealings in the cash proceeds from a share sale, but in the past the commission had obtained injunctions to prevent disposal of assets in the Swisscash case and stop usage of funds from land sale in the The Ayer Molek Rubber Co Bhd case.
Datuk Ishak Ismail has also been ordered by the KL High Court to furnish full details of his assets.
The SC obtained the injunction yesterday following its investigations into suspected breaches of securities laws by Ishak.
The commission is not about to stop where Kenmark is concerned. In fact it is actively investigating possible breaches of securities laws at the company, especially with respect to its previous board, management and key shareholders.
The SC said in a statement yesterday that the Kuala Lumpur High Court had also ordered Ishak to furnish within four days full and complete details of his assets, whether in Malaysia or elsewhere.
The SC said the RM10.2mil proceeds were from the sale of 58.7 million shares.
It is learnt that Ishak bought the Kenmark shares at between 5.8 and six sen each and subsequently sold them between June 9 and 11 at prices between 14 and 16 sen.
Ishak, the former majority shareholder of Kenmark, could not be reached for comments.
His entry and exit from Kenmark within 10 days from early June had raised eyebrows in the investing community. Ishak had said he was getting into Kenmark to help a friend (James Hwang, the managing director of Kenmark) and to offer re-employment to the company’s workers.
Ishak sold his entire direct and indirect 32% stake in the company after he failed to convince Hwang to come back to the company.
The Kenmark saga began when Hwang, a Taiwanese, disappeared mysteriously and that led to the closure of the company’s plants in Port Klang and Vietnam. Nearly a week after his disappearance, Hwang said his absence was due to an illness.
Soon after, Ishak made his brief entry.
Like the SC, Bursa Malaysia is also busy scrutinising documents for possible breaches while the Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon wants those responsible for Kenmark’s troubles brought to book.
Kenmark shares continued to fall yesterday, shedding one sen, or 9%, to 10 sen on volume of 18 million shares.
Separately, Kenmark said in reply to a Bursa query that it did not know the identity of the new controlling shareholders following Ishak’s exit as a substantial shareholder.
On its Port Klang operations, it said workers had reported back for work on June 7. Its wood division resumed operations and the management is working towards fulfilling outstanding orders.
As for the printing division, the management was still assessing the condition of equipment and machinery to get them back into working order to meet deliveries, it said.
The equipment and machinery were substantially intact at its Vietnam plant and negotiations were ongoing with suppliers and financiers to resume operations there as soon as practicable, the company said.
Kenmark also said Ho Soo Woon, an executive director, was in charge of the day-to-day management and operations of the company.
The reply to Bursa was made on the collective approval by the four new directors, Datuk Abd Gani Yusof, Ho, Ahmad Azhar Abdullah and Woon Wai En.
“The Taiwanese directors, Hwang, Chen Wen-Ling and Chang Chin-Chuan, have not responded with any comments on the query (from Bursa),’’ Kenmark said.
Showing posts with label Kenmark. Show all posts
Showing posts with label Kenmark. Show all posts
Wednesday, June 16, 2010
Tuesday, June 8, 2010
Hwang hives Kenmark stake to 8%
Wednesday June 9, 2010
Hwang hives Kenmark stake to 8%
By B.K. SIDHU
bksidhu@thestar.com.my
PETALING JAYA: The Kenmark Industrial Co (M) Bhd saga continues with the man in the middle of the controversy, James Hwang, shrinking his stake in the furniture maker from 29.93% as at April 23 to 7.96% currently.
This should explain the heavy selling of the shares on May 31 to June 2 by several brokerages in the country and the buyer could well be Datuk Ishak Ismail, who now directly and indirectly controls 32% stake in Kenmark.
With Hwang’s stake down, Ishak is the single largest shareholder in the furniture maker. Hwang is still managing director of the company and is ill in China.
Kenmark’s shares were suspended by Bursa Malaysia at 9am yesterday pending clarification from the company as to why it posted such a shocking set of financial results with a net loss of RM146mil for the fourth quarter ended March 31, 2010.
Gani ... ‘We have now established the policies.’
The new directors were also hauled up by both Bursa and the Securities Commission to explain the huge losses.
By yesterday evening, Kenmark made all the necessary announcements and it must have furnished enough information for Bursa to allow its shares to resume trading today. Its shares were last traded at 27 sen.
“We met the authorities yesterday and explained the situation. They understand that we are new and they have been very helpful. We need to regularise and work on a new plan to move forward,’’ Kenmark executive chairman Datuk Abd Gani Yusof said.
Kenmark on Monday reported a net loss of RM146mil for 4Q10 versus a net loss of RM84,000 in the same corresponding period a year ago.
The company blamed lower revenue, higher cost of sales, provisions for doubtful debts and impairment of assets by certain subsidiaries for the huge losses.
Kenmark’s troubles began when Hwang disappeared and news of his disappearances triggered massive selling of the stock which plunged 68% on May 31.
On the same day, 413 of its employees were locked out from its premises at Port Klang after EON Bank appointed receivers to seal up the plant to protect its interest. Kenmark is a PN17 company.
The net loss was a huge drop, said Gani. The new directors found that there were no proper policies on debtors in place.
“We have now established the policies and hope to write back a lot,’’ Gani said.
In reply to queries from Bursa, Kenmark detailed out the breakdown of the RM141.6mil administrative expenses it provided for.
Of this, RM69mil was for doubtful debt, RM12mil for un-realised foreign exchange losses, RM41mil for impairment for fixed assets (two assets in China and one in Taiwan), RM3mil bank charges and exchange losses, and RM4mil for other administrative expenses.
It has five companies owing it money to the tune of RM44mil and the credit terms are 180 days. The company hopes to begin collection to recover the amounts.
Kenmark says it has no write down on inventories and the board wants the management team to come up with a weekly cashflow projection to ascertain funding requirements.
Yesterday Kenmark directors also met up with EON Bank officials to discuss on financing. It also hopes to solve amicably the demands for repayment of RM60mil by Export-Import Bank of Malaysia.
With the financial results submitted, Ho Soon Woon, one of the four new directors appointed to Kenmark last week will leave today for Vietnam to assess the situation at its plant there.
Hwang hives Kenmark stake to 8%
By B.K. SIDHU
bksidhu@thestar.com.my
PETALING JAYA: The Kenmark Industrial Co (M) Bhd saga continues with the man in the middle of the controversy, James Hwang, shrinking his stake in the furniture maker from 29.93% as at April 23 to 7.96% currently.
This should explain the heavy selling of the shares on May 31 to June 2 by several brokerages in the country and the buyer could well be Datuk Ishak Ismail, who now directly and indirectly controls 32% stake in Kenmark.
With Hwang’s stake down, Ishak is the single largest shareholder in the furniture maker. Hwang is still managing director of the company and is ill in China.
Kenmark’s shares were suspended by Bursa Malaysia at 9am yesterday pending clarification from the company as to why it posted such a shocking set of financial results with a net loss of RM146mil for the fourth quarter ended March 31, 2010.
Gani ... ‘We have now established the policies.’
The new directors were also hauled up by both Bursa and the Securities Commission to explain the huge losses.
By yesterday evening, Kenmark made all the necessary announcements and it must have furnished enough information for Bursa to allow its shares to resume trading today. Its shares were last traded at 27 sen.
“We met the authorities yesterday and explained the situation. They understand that we are new and they have been very helpful. We need to regularise and work on a new plan to move forward,’’ Kenmark executive chairman Datuk Abd Gani Yusof said.
Kenmark on Monday reported a net loss of RM146mil for 4Q10 versus a net loss of RM84,000 in the same corresponding period a year ago.
The company blamed lower revenue, higher cost of sales, provisions for doubtful debts and impairment of assets by certain subsidiaries for the huge losses.
Kenmark’s troubles began when Hwang disappeared and news of his disappearances triggered massive selling of the stock which plunged 68% on May 31.
On the same day, 413 of its employees were locked out from its premises at Port Klang after EON Bank appointed receivers to seal up the plant to protect its interest. Kenmark is a PN17 company.
The net loss was a huge drop, said Gani. The new directors found that there were no proper policies on debtors in place.
“We have now established the policies and hope to write back a lot,’’ Gani said.
In reply to queries from Bursa, Kenmark detailed out the breakdown of the RM141.6mil administrative expenses it provided for.
Of this, RM69mil was for doubtful debt, RM12mil for un-realised foreign exchange losses, RM41mil for impairment for fixed assets (two assets in China and one in Taiwan), RM3mil bank charges and exchange losses, and RM4mil for other administrative expenses.
It has five companies owing it money to the tune of RM44mil and the credit terms are 180 days. The company hopes to begin collection to recover the amounts.
Kenmark says it has no write down on inventories and the board wants the management team to come up with a weekly cashflow projection to ascertain funding requirements.
Yesterday Kenmark directors also met up with EON Bank officials to discuss on financing. It also hopes to solve amicably the demands for repayment of RM60mil by Export-Import Bank of Malaysia.
With the financial results submitted, Ho Soon Woon, one of the four new directors appointed to Kenmark last week will leave today for Vietnam to assess the situation at its plant there.
Kenmark shares down
Published: Wednesday June 9, 2010 MYT 11:04:00 AM
Kenmark shares down
KUALA LUMPUR: Troubled furniture maker Kenmark Industrial, the company which posted massive losses for the fourth quarter ended March 31, 2010 (Q4), saw its share price plunge from 26 sen at open to 18.5 sen at 10.30am Wednesday trade.
Kenmark’s counter was suspended by Bursa Malaysia at 9am yesterday pending clarification from the company on its losses for Q4.
The company revealed a net loss of RM146 million for Q4 versus RM84,000 for the same period a year ago.
Kenmark shares down
KUALA LUMPUR: Troubled furniture maker Kenmark Industrial, the company which posted massive losses for the fourth quarter ended March 31, 2010 (Q4), saw its share price plunge from 26 sen at open to 18.5 sen at 10.30am Wednesday trade.
Kenmark’s counter was suspended by Bursa Malaysia at 9am yesterday pending clarification from the company on its losses for Q4.
The company revealed a net loss of RM146 million for Q4 versus RM84,000 for the same period a year ago.
Saturday, June 5, 2010
What’s going on in Kenmark?
Saturday June 5, 2010
What’s going on in Kenmark?
By B.K. SIDHU
bksidhu@thestar.com.my
OVER 20 years of sweat equity by the founders and employees of Kenmark Industrial Co (M) Bhd must have seemed to have come crashing down in just a span of a week.
The only one who has the answers to the strange and unexpected developments in the company is 59-year-old Taiwanese national Hwang Ding Kuo @ James Hwang, the company’s managing director. But his sudden “disappearance” and surprising reappearance days later with an apologetic note that he was taken ill and unconscious, has in fact, added more fodder to the unusual circumstances.
Along with Hwang, two other Taiwanese directors had also gone missing.
The uncertainty had led the share price to nose dive, wiping out some RM100mil in market value over this week.
The factory in Port Klang
The business
Kenmark is a big supplier of goods to the international supermarket chain Wal-Mart and other global stores either directly or via its agents.
The predicament in a nutshell – the company failed to submit its financial records on time; two creditor banks has asked the company to pay up; several banks and stockbroking firms have force sold the shares in the open market and its suppliers, to put it mildly are worried.
The first red flag had come from Bursa Malaysia with its query to the company on the unusual market activity, points out Rita Benoy Bushon, chief executive officer of the Minority Shareholder Watchdog Group (MSWG). Suspicions were further heightened when it failed to issue its fourth quarter results.
Rita is calling for Bursa Malaysia and the Securities Commission to conduct a thorough investigation on the matter and if wrongdoing is ascertained, to mete out the necessary penalties.
In a written reply, Bursa Malaysia said it was investigating the matter and “will pursue enforcement action for any breaches of the listing requirements.”
“Bursa Malaysia had engaged with the company’s independent directors, external auditors and officials to ascertain the state of affairs of the company immediately when the issues came to light,” it added.
In comes Ishak
And just as market observers found themselves gobsmacked by the slew of strange developments in the company, the story took on another dimension. Datuk Ishak Ismail, who made his mark in Malaysia’s corporate stage in the early 90s but had bowed out of the limelight in early 2000 following a conviction by the securities regulator, has emerged as the single largest shareholder of Kenmark after acquiring a 32% block.
Kenmark’s new directors (from left) Ho Soo Woon, Datuk Abd Gani Yusof and Woon Wai En at the press conference on Friday.
Ishak and Hwang are old pals. In fact, Ishak was the bumiputera shareholder of Kenmark with a 20% stake when the company was listed in 1997 but had subsequently unwound his holdings.
Ishak tells the StarBizWeek that he had received a call from Hwang on Monday night to “help out”.
Based on announcements to Bursa Malaysia, BHLB Trustee Bhd, a trust for Ishak’s family, scooped up 30 million shares or 16.83% stake in Kenmark on Tuesday. A day later, he used another vehicle, Unioncity Enterprise Ltd to acquire 27 million shares or 15.53% of Kenmark, raising his stake to 32.36%, just shy of the trigger point for a mandatory general offer.
Based on Kenmark’s share price over the two days of the acquisition, it can be assumed that he had acquired the shares at not more than 8 sen apiece. When trading on Kenmark’s shares resumed on Friday, the counter shot up to 26 sen, a 126% gain from its last traded price of 11.5 sen. This means Ishak could be sitting on a paper gain of some RM10mil.
When contacted by the StarBizWeek, Ishak who was in Baghdad, explained why he had acquired the shares: “It is a good company. I checked and there was nothing wrong with the operations. There is just some misunderstanding. What I am thinking now is how we can get the business operations re-started. I have been an investor before and this company is involved in a lot of export business. Imagine the foreign earnings it brings into Malaysia.
“There is also another aspect. About 400 jobs are at stake if the plant does not restart. So, I wanted to help bring the employees back to work. So, it is not about (grabbing) an opportunity but doing a social service. What is wrong with that?’’ he asks.
How much did he acquire the shares for? “I do not know. The purchases were done by the trustees. They make independent decisions,’’ he replies.
Still, many observers expect Ishak to exit not too long from now, pocketing some handsome capital gains. Will that happen? “It all depends on the trustees, it is not about me. This is a family trust and I am not in control of the trust. But this (Kenmark) is a good company,’’ he adds.
Lost confidence
Meanwhile, 133 Malaysian workers of the total workforce of 413 employed by Kenmark are seeking RM1.4mil in damages for being locked out of the factory at the Labour Court in Port Klang. The claims were for termination benefits, compensation in lieu of notice and unused leave.
Quite clearly, the four new directors on board have an uphill battle ahead to regain lost confidence. After their first board meeting on Thursday, they had proceeded to the factory in Port Klang but were barred from entering the premises. On Friday, they met up with the senior team.
CLICK to view graphic
“We just met key management staff and asked them what is required to restart the whole production again. We will take it from there,’’ said newly appointed executive chairman Datuk Abd Gani Yusof.
At the start
Kenmark was set up in Taiwan back in 1978. Kenmark Industrial Co Ltd, which had a factory in Nei Hu, Taipeh, set up its first overseas plant a decade later in 1988. The plant in Malaysia began operations in 1989 on a 10-acre site in Port Klang.
Hwang, the founder of the company, is said to be a very enterprising man; within a short span, the operations expanded to Singapore, Australia, London, Hong Kong, Vietnam, US and China.
The Malaysian operations was listed on Bursa Malaysia in 1997. There are two other Taiwanese directors in the company - Chen Wen-Ling and Chang Chin-Chuan. Chen owned 18.7% stake in the company, according to the company’s latest annual report. With Hwang, the Taiwanese collectively owned 46.4% of Kenmark.
A substantial amount of these shares, it is believed, were pledged to banks and several stockbroking firms for share margin financing. Given the counter’s free fall over the week, many of these shares were force sold, which led many to believe that this is how Ishak could have accumulated his interest in the company.
Domino effect
On Wednesday, after Hwang had “disappeared”, the factory in Malaysia was shut down.
Some suppliers, spooked by the developments, were believed to have taken back their supplies.
On May 27, the company’s two independent directors Zainab Abu Bakar and Yeunh Wee Tiong had called off the audit committee meeting because Hwang had failed to appear. They could not reach Hwang or the two other Taiwanese directors.
Much to their dismay, Zainab and Yuenh had found the factory sealed. They both had stepped down from the board on Thursday.
One of the creditors, EON Bank had caught wind of these developments and wasted little time engaging their solicitors to seal the company. The company received letters of demand from EON Bank and Export-Import Bank for some RM71mil.
In a statement to Bursa yesterday, Kenmark said “There were some trade bills due for payment at the end of May 2010 but due to the unfortunate situation last week ... the trade bills could not be paid and EON Bank in safeguarding their interest had then appointed the Receivers.”
As for its Vietnam plant, Kenmark said that it has learnt from Hwang that the local authorities were requested to take control of the operating premises to safeguard the assets when some looting occurred during the absence of senior management staff.’
Hell breaks loose
On Monday, the situation worsened. The staff who turned up for work that day were told to go home. On that same day, Kenmark’s independent directors had updated officials from Bursa Malaysia on these developments, which led the latter to slap the company with a PN17 status.
After two days of wild speculation, Hwang appeared with his apologetic note that he was “sorry for the confusion” and that he was “taken ill in China ... and was in a delirious state from lack of sleep and was in and out of consciousness.”
Naturally, most found the excuse hard to swallow.
“It shows total disregard of shareholders, suppliers and employees. Even if he was not around, how could anyone expect the company to run rudderless?,” asks an observer.
Those who are close to Hwang say that he largely handled the business on his own, preferring that to delegating the work to the rest at top management. “This could explain the chaos his absence had resulted in,” says a source.
The task ahead
Since then, four professional managers have been appointed to the board. They are Ho Soo Woon, Ahmed Azhar Bin Abdullah, Woon Wai En, Datuk Abd. Gani Bin Yusof. Woon was formerly with Vads Bhd while Ho has his own family business. Gani has several businesses of his own but not much is known about Ahmed.
Evidently, the team is determined to get things back to normalcy. One of the most urgent matters that needs to be addressed is that the company needs to submit the fourth quarter results. The directors have failed to get an extension of time to June 30 from Bursa Securities to submit its results as the application was submitted less than fifteen days prior to the due date for submission.
“The Directors do not have access to the accounting records as yet and shall endeavour to have the results released as soon as available,” it said in a note to Bursa Malaysia late Friday.
Time is not a luxury it has. Bursa has given Kenmark till June 8 to submit the results, failing which the trading of shares will be suspended.
Analysts expect the group’s showing in the fourth quarter to be “less impressive” as orders from the European markets have been soft due to the economic slowdown.
In the company’s latest annual report, it had stated that it will focus on strengthening the wood-based business as margins were better than the LCD television business unit which was facing stiff competition. It also expected demand for wood-based products to remain stagnant until the economy in the European and North American markets pick up.
About 78% of Kenmarks business, said the analyst is export driven; one of its largest export markets for its furniture products is Europe. As such, he expects the weakening Euro to put a damper on the company’s latest results.
For the year ended March 2009, Kenmark made a net profit of RM3.8mil on the back of RM259mil sales compared to RM10.1mil and RM308mil a year ago.
Questions left unanswered
Without a doubt, the whole debacle has raised key corporate governance issues. The unusual market activity in the counter also needs to be prodded further by the authorities.
Was this simply a case of one thing leading to another? Or is there more to it than meets the eye?
“From a corporate governance view, it is astonishing that it has reached this stage. Some processes and checks and balances had failed. If so, how and why?” asked a peeved observer.
Related Stories:
Kenmark among firms that broke listing rules
Ishak – no newcomer to corporate controversy
Stock an easy buy after force-selling
Directors shed some light
A bizarre run of events
What’s going on in Kenmark?
By B.K. SIDHU
bksidhu@thestar.com.my
OVER 20 years of sweat equity by the founders and employees of Kenmark Industrial Co (M) Bhd must have seemed to have come crashing down in just a span of a week.
The only one who has the answers to the strange and unexpected developments in the company is 59-year-old Taiwanese national Hwang Ding Kuo @ James Hwang, the company’s managing director. But his sudden “disappearance” and surprising reappearance days later with an apologetic note that he was taken ill and unconscious, has in fact, added more fodder to the unusual circumstances.
Along with Hwang, two other Taiwanese directors had also gone missing.
The uncertainty had led the share price to nose dive, wiping out some RM100mil in market value over this week.
The factory in Port Klang
The business
Kenmark is a big supplier of goods to the international supermarket chain Wal-Mart and other global stores either directly or via its agents.
The predicament in a nutshell – the company failed to submit its financial records on time; two creditor banks has asked the company to pay up; several banks and stockbroking firms have force sold the shares in the open market and its suppliers, to put it mildly are worried.
The first red flag had come from Bursa Malaysia with its query to the company on the unusual market activity, points out Rita Benoy Bushon, chief executive officer of the Minority Shareholder Watchdog Group (MSWG). Suspicions were further heightened when it failed to issue its fourth quarter results.
Rita is calling for Bursa Malaysia and the Securities Commission to conduct a thorough investigation on the matter and if wrongdoing is ascertained, to mete out the necessary penalties.
In a written reply, Bursa Malaysia said it was investigating the matter and “will pursue enforcement action for any breaches of the listing requirements.”
“Bursa Malaysia had engaged with the company’s independent directors, external auditors and officials to ascertain the state of affairs of the company immediately when the issues came to light,” it added.
In comes Ishak
And just as market observers found themselves gobsmacked by the slew of strange developments in the company, the story took on another dimension. Datuk Ishak Ismail, who made his mark in Malaysia’s corporate stage in the early 90s but had bowed out of the limelight in early 2000 following a conviction by the securities regulator, has emerged as the single largest shareholder of Kenmark after acquiring a 32% block.
Kenmark’s new directors (from left) Ho Soo Woon, Datuk Abd Gani Yusof and Woon Wai En at the press conference on Friday.
Ishak and Hwang are old pals. In fact, Ishak was the bumiputera shareholder of Kenmark with a 20% stake when the company was listed in 1997 but had subsequently unwound his holdings.
Ishak tells the StarBizWeek that he had received a call from Hwang on Monday night to “help out”.
Based on announcements to Bursa Malaysia, BHLB Trustee Bhd, a trust for Ishak’s family, scooped up 30 million shares or 16.83% stake in Kenmark on Tuesday. A day later, he used another vehicle, Unioncity Enterprise Ltd to acquire 27 million shares or 15.53% of Kenmark, raising his stake to 32.36%, just shy of the trigger point for a mandatory general offer.
Based on Kenmark’s share price over the two days of the acquisition, it can be assumed that he had acquired the shares at not more than 8 sen apiece. When trading on Kenmark’s shares resumed on Friday, the counter shot up to 26 sen, a 126% gain from its last traded price of 11.5 sen. This means Ishak could be sitting on a paper gain of some RM10mil.
When contacted by the StarBizWeek, Ishak who was in Baghdad, explained why he had acquired the shares: “It is a good company. I checked and there was nothing wrong with the operations. There is just some misunderstanding. What I am thinking now is how we can get the business operations re-started. I have been an investor before and this company is involved in a lot of export business. Imagine the foreign earnings it brings into Malaysia.
“There is also another aspect. About 400 jobs are at stake if the plant does not restart. So, I wanted to help bring the employees back to work. So, it is not about (grabbing) an opportunity but doing a social service. What is wrong with that?’’ he asks.
How much did he acquire the shares for? “I do not know. The purchases were done by the trustees. They make independent decisions,’’ he replies.
Still, many observers expect Ishak to exit not too long from now, pocketing some handsome capital gains. Will that happen? “It all depends on the trustees, it is not about me. This is a family trust and I am not in control of the trust. But this (Kenmark) is a good company,’’ he adds.
Lost confidence
Meanwhile, 133 Malaysian workers of the total workforce of 413 employed by Kenmark are seeking RM1.4mil in damages for being locked out of the factory at the Labour Court in Port Klang. The claims were for termination benefits, compensation in lieu of notice and unused leave.
Quite clearly, the four new directors on board have an uphill battle ahead to regain lost confidence. After their first board meeting on Thursday, they had proceeded to the factory in Port Klang but were barred from entering the premises. On Friday, they met up with the senior team.
CLICK to view graphic
“We just met key management staff and asked them what is required to restart the whole production again. We will take it from there,’’ said newly appointed executive chairman Datuk Abd Gani Yusof.
At the start
Kenmark was set up in Taiwan back in 1978. Kenmark Industrial Co Ltd, which had a factory in Nei Hu, Taipeh, set up its first overseas plant a decade later in 1988. The plant in Malaysia began operations in 1989 on a 10-acre site in Port Klang.
Hwang, the founder of the company, is said to be a very enterprising man; within a short span, the operations expanded to Singapore, Australia, London, Hong Kong, Vietnam, US and China.
The Malaysian operations was listed on Bursa Malaysia in 1997. There are two other Taiwanese directors in the company - Chen Wen-Ling and Chang Chin-Chuan. Chen owned 18.7% stake in the company, according to the company’s latest annual report. With Hwang, the Taiwanese collectively owned 46.4% of Kenmark.
A substantial amount of these shares, it is believed, were pledged to banks and several stockbroking firms for share margin financing. Given the counter’s free fall over the week, many of these shares were force sold, which led many to believe that this is how Ishak could have accumulated his interest in the company.
Domino effect
On Wednesday, after Hwang had “disappeared”, the factory in Malaysia was shut down.
Some suppliers, spooked by the developments, were believed to have taken back their supplies.
On May 27, the company’s two independent directors Zainab Abu Bakar and Yeunh Wee Tiong had called off the audit committee meeting because Hwang had failed to appear. They could not reach Hwang or the two other Taiwanese directors.
Much to their dismay, Zainab and Yuenh had found the factory sealed. They both had stepped down from the board on Thursday.
One of the creditors, EON Bank had caught wind of these developments and wasted little time engaging their solicitors to seal the company. The company received letters of demand from EON Bank and Export-Import Bank for some RM71mil.
In a statement to Bursa yesterday, Kenmark said “There were some trade bills due for payment at the end of May 2010 but due to the unfortunate situation last week ... the trade bills could not be paid and EON Bank in safeguarding their interest had then appointed the Receivers.”
As for its Vietnam plant, Kenmark said that it has learnt from Hwang that the local authorities were requested to take control of the operating premises to safeguard the assets when some looting occurred during the absence of senior management staff.’
Hell breaks loose
On Monday, the situation worsened. The staff who turned up for work that day were told to go home. On that same day, Kenmark’s independent directors had updated officials from Bursa Malaysia on these developments, which led the latter to slap the company with a PN17 status.
After two days of wild speculation, Hwang appeared with his apologetic note that he was “sorry for the confusion” and that he was “taken ill in China ... and was in a delirious state from lack of sleep and was in and out of consciousness.”
Naturally, most found the excuse hard to swallow.
“It shows total disregard of shareholders, suppliers and employees. Even if he was not around, how could anyone expect the company to run rudderless?,” asks an observer.
Those who are close to Hwang say that he largely handled the business on his own, preferring that to delegating the work to the rest at top management. “This could explain the chaos his absence had resulted in,” says a source.
The task ahead
Since then, four professional managers have been appointed to the board. They are Ho Soo Woon, Ahmed Azhar Bin Abdullah, Woon Wai En, Datuk Abd. Gani Bin Yusof. Woon was formerly with Vads Bhd while Ho has his own family business. Gani has several businesses of his own but not much is known about Ahmed.
Evidently, the team is determined to get things back to normalcy. One of the most urgent matters that needs to be addressed is that the company needs to submit the fourth quarter results. The directors have failed to get an extension of time to June 30 from Bursa Securities to submit its results as the application was submitted less than fifteen days prior to the due date for submission.
“The Directors do not have access to the accounting records as yet and shall endeavour to have the results released as soon as available,” it said in a note to Bursa Malaysia late Friday.
Time is not a luxury it has. Bursa has given Kenmark till June 8 to submit the results, failing which the trading of shares will be suspended.
Analysts expect the group’s showing in the fourth quarter to be “less impressive” as orders from the European markets have been soft due to the economic slowdown.
In the company’s latest annual report, it had stated that it will focus on strengthening the wood-based business as margins were better than the LCD television business unit which was facing stiff competition. It also expected demand for wood-based products to remain stagnant until the economy in the European and North American markets pick up.
About 78% of Kenmarks business, said the analyst is export driven; one of its largest export markets for its furniture products is Europe. As such, he expects the weakening Euro to put a damper on the company’s latest results.
For the year ended March 2009, Kenmark made a net profit of RM3.8mil on the back of RM259mil sales compared to RM10.1mil and RM308mil a year ago.
Questions left unanswered
Without a doubt, the whole debacle has raised key corporate governance issues. The unusual market activity in the counter also needs to be prodded further by the authorities.
Was this simply a case of one thing leading to another? Or is there more to it than meets the eye?
“From a corporate governance view, it is astonishing that it has reached this stage. Some processes and checks and balances had failed. If so, how and why?” asked a peeved observer.
Related Stories:
Kenmark among firms that broke listing rules
Ishak – no newcomer to corporate controversy
Stock an easy buy after force-selling
Directors shed some light
A bizarre run of events
Wednesday, June 2, 2010
Kenmark's MD has been unwell and unconscious
June 2, 2010--According to Bursa's announcement at 16:49 today, the Independent Directors has today received a letter through the e-mail from Mr Hwang Ding Kuo @James Hwang, the Managing Director of Kenmark Industrial Co. (M) Bhd(Kenmark) informing of his present whereabout. Mr James Hwang has also requested the company to release a press statement for him.
Mr James Hwang in his letter has stated that he has been unwell and unconscious and was also uncontactable. He has now regained full consciousness but still physically weak. In the letter Mr James Hwang has proposed the appointment of Mr Ho Soo Woon, Encik Ahmed Azhar Bin Abdullah, Mr Woon Wain En, Datuk Adu. Gani Bin Yusof to manage the issues that have arisen in his absence. Two are proposed to be Executive Directors.
The Independent Directors will convene a meeting tomorrow morning by teleconference with the Taiwanese directors to consider the appointment and make the necessary announcement.
Blogger: This is very interesting. It seems that the factory in Taiwan and Vietnam have run into trouble a week ago. James said he was unwell. Then who is taking care of him while he was unconscious.
On the same day at 17:52:22, there is a notice of shares buy back by the company on May 17, 2010, 36,000 units was bought between 0.865 to 0.89.
That is to say before James disappeared, there was a share buy-back program by the company. What did the company trying to do?
There is another announcement by Bursa on 17:56:04 that the company has received a letter of demand for a sum of RM 20,903,078.28 from EON Bank to be paid within 7 days from the date of the letter on June 1, 2010.
Kenmark is actively traded today with 139.7million shares changed hand. It is suspended on 4:43pm. It is the top volume counter today.
The newspaper's report about Kenmark's sudden closure
Mr James Hwang in his letter has stated that he has been unwell and unconscious and was also uncontactable. He has now regained full consciousness but still physically weak. In the letter Mr James Hwang has proposed the appointment of Mr Ho Soo Woon, Encik Ahmed Azhar Bin Abdullah, Mr Woon Wain En, Datuk Adu. Gani Bin Yusof to manage the issues that have arisen in his absence. Two are proposed to be Executive Directors.
The Independent Directors will convene a meeting tomorrow morning by teleconference with the Taiwanese directors to consider the appointment and make the necessary announcement.
Blogger: This is very interesting. It seems that the factory in Taiwan and Vietnam have run into trouble a week ago. James said he was unwell. Then who is taking care of him while he was unconscious.
On the same day at 17:52:22, there is a notice of shares buy back by the company on May 17, 2010, 36,000 units was bought between 0.865 to 0.89.
That is to say before James disappeared, there was a share buy-back program by the company. What did the company trying to do?
There is another announcement by Bursa on 17:56:04 that the company has received a letter of demand for a sum of RM 20,903,078.28 from EON Bank to be paid within 7 days from the date of the letter on June 1, 2010.
Kenmark is actively traded today with 139.7million shares changed hand. It is suspended on 4:43pm. It is the top volume counter today.
The newspaper's report about Kenmark's sudden closure
Sunday, May 30, 2010
Why Kenmark is down? Why IOICorp goes up?
31/5 Kenmark down 22.5 sen to 10.5 sen as only two independent directors present during its audit meeting on 27 May, 2010. MD not contactable. Key execs resigned.
31/5 Malaysia's palm oil exports rose 13.1 pct to 1,332,026 metric tons in May 2010 from 1,178,159 in April 2010.
IOICorp rose 17 sen to 4.78 at 11:53 am because of the above news.
31/5 Malaysia's palm oil exports rose 13.1 pct to 1,332,026 metric tons in May 2010 from 1,178,159 in April 2010.
IOICorp rose 17 sen to 4.78 at 11:53 am because of the above news.
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