Date: January 25, 2005
This morning (Tuesday) my Vice-President, Mr. Christopher Cheong and I met with Mr. Jia Changbin, President, CAOHC, Mdm Gu Yanfei, Leader of the special restructing task force & non-executive director and Mr. Andrew Grimmett, Director, Deloitte, Mr. Chaly Mah Chee Kheong, CEO and Managing Partner, Deloitte, Mr. Yap Lian Seng, Director, Stamford Law Corporation and Mr. Patrick Ang, Senior Partner, Rajah & Tann to discuss the scheme of arrangement. Mr. Jia requested to meet with me to brief SIAS on the details of the scheme of arrangement. This is the third time that the task force has met with SIAS officials. It considers the interests of minority shareholders seriously.
At the one and a half hour meeting, SIAS was assured by Mr. Jia that the scheme of arrangement demonstrated the parent companies’ goodwill and sincerity in finding an equitable solution. It is in this spirit that it raised its previous offer from 25 cents to 41.5 cents per dollar. Mr. Jia emphasized its commitment to minority shareholders and we were advised that the Beijing authorities have also from the outset placed emphasis on finding a solution that would be equitable to all especially the minority shareholders. CAOHC’s decision not to participate in the cash distribution and the deferred debt and instead to convert its debt to shares in the company at a discount is a further testimony, according to Mr. Jia, of the company’s commitment to finding an acceptable solution. Any legal action such as the one currently proposed in America does not assist the companies efforts to restructure the company. Such a path if taken by shareholders will be obstructive to its plan to put the company back in operation.
We expressed our concerns relating to the valuation of the shares to be issued to CAOHC and the new investor which may be highly dilutive for existing shareholders. We urged CAOHC that in fixing the price of the shares that will be issued to CAOHC it should have minimum impact on minority shareholders. We were assured by Mr. Jia and we are pleased to note, that the conversion of debt to equity will not adversely affect the interest of minority shareholders. We are also pleased to note Mr. Jia’s assurance that the equity restructuring will also take care of the interest of the minority shareholders.
SIAS calls on all creditors of CAO to support the restructuring efforts by the STF in the interests of all the stakeholders be served.
Mr. Jia has assured me that SIAS will be kept advised on further developments.
Mr David Gerald J.
President & CEO
Securities Investors Association (Singapore)
