MiiF Shareholder EGM (A Personal Glimpse)

Attended the MiiF EGM shareholder meeting yesterday. The main objectives are to increase number of directors to 9 and to vote on the nomination of three directors put forward by the two requisitioing shareholders owning close to 10% of the MiiF shares. The current board is advising shareholders to vote AGAINST the nomination of the three additional shareholders.

The end result is that the three nomintations were voted down in the ratio of about 40:60 while the resolution to increase the number of directorships to 9 was carried. However, I read from the SGX report that the actual number of keypad votes are quite different. In fact, if we go by keypad counts which reflect the proportion of people in the room, then the resolutions to nominate the three additional directors is greater than 50%. If we allow the people in the room to be representative of the number of shareholders out there in related proportion to the keypad votes, then it actually suggest that more people are unhappy with the way the current MiiF is running the show and wanted a change.

I was there and you could  that the level of unhappiness with the board is quite pulsating.One shareholder virtually gave the chairman Heng Chiang Meng, an ex-PAP MP is dressing down. I find the board argument on keeping the dynamics of the board unchanged by having four independent directors and one nominated by the fund manager totally unconvincing. Independent directors exist to check on the bias of non-independent directors who repersented significant interests in the company. However, in MiiF case, non-independent directors are totally missing except for one nominated by the manager. Non-independent directors are needed because they represent substantial interests in the company and will have greater urgency to improve on the operating conditions of the company and share price. This is totally missing in MiiF. Whereas, independent directors tend to have too many directorships or even hold fulltime jobs, so they tend to devote only a small portion of their time to the company and lack genuine interest in the improvement of the company beyong collecting their directors fees and adding an extra line to their resume.
A composition of the board make up almost entirely by independent directors is in my opinion not good for the trust. A fine balance is needed and I do not find that in the current board which explain its underperformance.

I am disappointed the resolutions to add 3 non-indepndent directors were not carried.

Olam Bonds cum Warrants Rights Issue

Olam announced a renounceable bonds cum warrants right issue. It will offer 313 bonds at US$1 and 162 warrants with a execrcisable price of US$1.291 for every 1000 shares. The warrants are not exercisable fo the first three years. The bonds mature in 2018 and carry a interest rate of 6.75% with an initial issue price of 95%. Most importantly, Temasek undertake to take up 100% of any unsubscribed rights.

This means that olam will raise immediately US$750m in bond with a further US$500m if and when warrants are converted.

This exercise make Muddy Water offer to get Olam Debt rated meaningless as Olam can raise debt in double quick time even in time of stress. It also show that Olam has the 100% backing of Temasek.

For small shareholders, even if you do not take up the rights, it will not hurt you at this stage as the warrants are priced at $1.575 which is the current price. However, you may miss up on the upside later on.

By leveraging on Temasek, Olam share and bond price will be supported and shortist will most likely leave the market quietly. What is left for Olam is execution, execution and still execution.