MC Payment’s share price rose by more than 82% in two trading sessions, June 18 and June 21. Volume traded on those two sessions surged (from 120,0000 on June 17) to 34.5 million on June 18 and 69.4 million on June 21. On June 22, both price and volume receded, with 12.8 million shares changing hands. MC Payment’s shares outstanding stand at 272.25 million following the 10 million share placement in March.
MC Payment was listed via a reverse takeover (RTO) of Artivision Technologies which completed on Feb 18. On Feb 19, founder and CEO Anthony Koh had 6.11% in MC Payment, and Ching Chiat Kwong owned 28.09%. Ching is better known as the executive chairman and major shareholder of Oxley Holdings.
On March 10 this year, MC Payment announced it had raised $4 million through placement at 40 cents per share. The placement shares accounted for 3.7% of the enlarged share capital. Investors included Toh Soon Huat, Lim Tiong Kheng, other high-net-worth clients of OCBC Securities and Levin Lee of Ace Peak Capital. The placement diluted Koh’s holdings to 5.88%, and Ching’s to 27.06%.
A longterm shareholder, Goh Way Siong, who held 5.18% of MC Payment post-RTO, disposed of some shares, but held onto more than 88% of his original shareholding at RTO of 13.58 million. Following the March placement, his stake is down to 4.42%.
On June 17, the company, through Koh and SGXnet, announced it had received a letter of intent from OY!, an Indonesian remittance and payment company, and its investors include Softbank and Temasek Holdings. The announcement led to the price and volume surge.
Where did the volume come from? Market observers are not sure. According to the circular just ahead of the RTO, Ching, Koh, co-founder and chief operating officer Kim Moon Soo, and the vendors excluding Koh and Moon are under some form of moratorium or other for at least six months.
For instance, the vendors (other than Koh and Moon) have given undertakings “not to sell, contract to sell, offer, realise, transfer, assign, grant any option or right to acquire or otherwise dispose of 88% of their respective shareholding interest (directly or indirectly) in the company” for six months from the date the shares start trading on Catalist. They have also given an undertaking not to sell 50% of the moratorised portion for the subsequent six months.
Zico Capital’s moratorium is for three months. Zico Capital holds 2.36 million shares. A placement of 10 million shares on March 10 is also not under moratorium. Hence, shares not under moratorium are around 54 million shares (see table). If Tee Wee Sien’s shares are classified as vendor shares, then number of shares subject to at least six months moratorium falls to around 215 million. At any rate, the company has not announced any change in shareholding of the major shareholders as at June 24.
Unhappy shareholder
Separately, a shareholder with several million MC Payment shares is upset that a proxy form which was signed by the shareholder was used to oust directors from the board at an AGM held on April 28. “I did not indicate any votes for or against the resolutions in the proxy form as I thought the AGM was just to adopt the company accounts. I didn’t know I had to indicate my votes on the form,” the shareholder griped.
Shareholders have often been asked for proxies, for proxy form holders to observe AGMs, and many have not indicated how they would want the proxy holders to vote. Almost never would proxy holders vote against shareholders’ wishes.
The MC Payment shareholder said: “When I retrieved the form from Tricor, I discovered that the proxy form included votes in favour of resolutions 1,3, 5 to 9, but votes against resolutions 2 and 4.”
Resolution 2 was to re-elect Harry Ng as a director, and resolution 4 was to re-elect Shawn Ching as a director. Both Ng and Shawn Ching failed to garner sufficient votes with 56.69% of votes voting against these two resolutions.
According to a report by Mak Yuen Teen, associate professor of Accounting at NUS Business School, on his website Governance for Stakeholders, Shawn Ching offered himself up for re-election because MC Payment’s CEO Anthony Koh said he was not confident of garnering sufficient votes to get re-elected. Koh subsequently voted against re-elcting Shawn Ching to the board.
In a circular dated June 24, MC Payment says it it “irrelevant to the company how Mr Koh voted; that is a shareholder issue and is not relevant to the governance of the company’s board”.
“Mr Shawn losing his directorship at the AGM was a surprise because he had been appointed at the EGM just three months earlier with 100% of the votes. Further, he is the son of Ching Chiat Kwong, MC Payment’s controlling shareholder, who owns 27.06% of the shares. The only other substantial shareholder of MC Payment, Koh Beng Kiok Anthony, owns just 5.88%,” Mak observed.
In a statement on the Singapore Exchange (SGX) on June 19, MC Payment did not directly address the standing-in of Shawn Ching for Koh and the matter of the proxy votes except to reiterate that Ching had not provided any substantial proof that proxy votes were manipulated.
In the June 24 circular, MC Payment says that “not a single shareholder had independently corroborated Mr Ching’s claim that proxy forms were manipulated”. However, at least one shareholder is concerned of the consequences of being quoted and has requested anonymity.
In the early hours of June 22, MC Payment announced an EGM, requisitioned by Ching, would be held on July 30, 2021, to vote to remove five directors. These are Albert Cheok, MC Payment’s current chairman; Anthony Koh, MC Payment’s current CEO and a director of the company; Kim Moon Soo; Lilian Koh; and Ong Kim Huat, who was nominated as a director in May.
Term sheet versus LOI
One of the points of contention between Ching on the one side, and Koh and Cheok on the other was a term sheet signed with representatives of NGSC, a company on the SGX’s watchlist, and which SGX had instructed to delist. Interestingly, Cheok was chairman of First REIT’s manager when it was listed with financially engineered valuations based on inflated master lease rents.
On June 11, in reply to SGX queries, the company said: “The board’s grant of authorisation to Mr Anthony Koh was to allow the company to engage in exploratory talks with NGSC. These talks have concluded with no outcome. As at the date of this announcement, the company did not enter, and has not entered, into any binding term sheets or agreements in relation to any acquisition of NGSC. Accordingly, no announcements were made by the company on this.”
On the other hand, the term sheet with NGSC seen by The Edge Singapore says: “In consideration of the time and expenses devoted and to be devoted by the purchaser…. with respect to the proposed acquisition, Provisions 9, 10, I I and 13 of this term sheet shall be binding obligations of the vendors and of the company upon their acceptance of the term sheet, whether or not the definitive agreement or proposed acquisition is consummated.”
On June 17, MC Payment announced a letter of intent which was signed with OY! “[MC Payment] on June 16, received a Letter of Intent (LOI) dated June 14, 2021, from Dompet Harapan Bangsa (OY!), a payments and remittance company based in Indonesia, for OY! to explore investment opportunities by taking a strategic equity stake in the company. Pursuant to the LOI, OY! indicated that it intends to move towards a formal term sheet or a memorandum of agreement ‘soonest’,” the company said.
Mak pointed out that the term sheet with NGSC was not announced until queried by the SGX, yet an LOI with OY! was announced. The Edge Singapore has approached the company for comment.
Since the LOI with OY! was announced, MC Payment’s share price is still up 43% despite a retreat on June 24. If the LOI with OY! moves towards a term sheet, the current shareholders are likely to be diluted, unless they sell to OY!, but they are under moratorium.
Company’s board versus sponsor and major shareholder
More immediately, MC Payment will be holding a first EGM on June 30 this year, requisitioned by Ching, to appoint as directors Harry Ng, Shawn Ching, Johnny Chee, Henry Tan and Ching himself to the board.
The MC Payment circular dated June 24 makes for strange although entertaining reading with statements and ripostes. In a twist, the current directors have said and, unsurprisingly so, that Harry Ng, Shawn Ching, Johnny Chee, Henry Tan and Ching are not suitable as directors of the company.
Yet in the same circular, the sponsor recommends that these same five are suitable to be recommended as directors.
The circular also contends that the loans of $559,550 and the redemption of the $10 million of bonds by Ching were to keep Artivision afloat so that the RTO could complete. The circular says the bond redemption “was part of a transaction under which Ching received $33.87 million worth of shares at the completion of the RTO. As at June 18, those shares are worth $32.25 million”.
Perhaps the point of contention is the shareholding structure. Founder and CEO Koh has been diluted, but that is the nature of FinTech companies because of their “cash burn”. CEOs need a degree of independence to run a company. And, FinTech companies listed on Nasdaq have dual share structures not available on SGX, where the founder has more voting rights than ordinary shareholders. Whatever the case, the sales and purchase agreement for the RTO was voted on, and signed by a majority of the equity holders of MC Payment including Koh.
Coincidentally, this is not the only board tussle that MC Payment has had to contend with. CP Foods had taken convertible bonds in the company and in return given a board seat. According to other investors in MC Payment, the CP Foods representative was not told of the EGM to vote in favour of the RTO. Unfortunately, convertible bondholders do not have voting rights. The CP Foods convertible bond was redeemed, and CP Foods exited MC Payment.
On June 30, and July 30, the equity holders of MC Payment all have equal voting rights, including the largest shareholders. Singapore investors have been described as a pliant lot. This is one of those rare occasions where shareholders are exercising those rights and every vote is likely to count.
