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Wednesday, 26 June 2013

Hiap Teck RM2.8million Out of court settlement with founder

Hiap Teck Venture Berhad, together with 2 of it wholly own subsidiary, Alpine Pipe Manufacturing Sdn Bhd and Hiap Teck Hardware Sdn Bhd have reach out of court settlement with it founder Kua Hock Lai with Kua Hock Lai 1st defendent have to paid RM2.8 million to plantiff above.

Hiap Teck Venture Berhad, together with 2 of it wholly own subsidiary, Alpine Pipe and Hiap Tech Hardware, claiming it founder Kua Hock Lai has form a new company Xinsteel Sdn Bhd (2nd defendent) to compete with Hiap Teck Venture Berhad and it 2 wholly own subsidiary after disposing Hiap Tech Venture Berhad to it new owner, by inducing customer of Hiap Teck group of company to buy from Xinsteel sdn Bhd and offer staff of Hiap Teck Venture Berhad to joint Xinsteel Sdn Bhd. This cause Hiap Teck loss of customer and loss of staff to Xinsteel Sdn Bhd.

Hiap Teck now run by new owner tycoon Datuk David Law Tien Seng.

This is not time first time Kua family dispose off a listed company to start a company again.

Kua family have started and listed a hardware manufacturing company Wing Teik Holdings Berhad.

Kua family disposed of now defuncted Wing Teik Holdings Berhad to Westmont Holdings Sdn Bhd in Dec 1993, which head by Joseph Chong at that point.Joseph Chong later dispose off Westmont group to Soh Chee Wen.

In 2003, Kua family listed another company Hiap Teck Venture Berhad in a low profile manner. When Kua family dispose off Hiap Teck Venture Berhad again. I am worried for the buyer Datuk David Law Tien Seng as Kua family have a track record of getting the timing right. Kua family have the reputation of getting the industry cycle correct. Will Hiap Teck become the next Wing Teik is yet to be see?

However, when news of Hiap Teck suing Kua family in court out in April 2013. It appear that one of their trade secret is to get all the old staff, supplier and customer to support their new business venture. It can't say them wrong if the new owner never sign an Anti-competition Agreement with the seller.

Looking at market capitalisation they build when IPO of Hiap Teik after they dispose off Wing Teik Holdings Berhad. RM2.8 million compensation seem a low value if all the business loss to their new company Xinsteel Sdn Bhd.

However, if you look at the deal. Hiap Teik has paid Datuk Law RM110million to acquired 55% stake in Eastern Steel from Datuk Law. Eastern steel is dormant but plans to build a blast furnace in the Teluk Kalung Estate in Kemaman, Terengganu, where it owns two parcels of industrial land measuring 600 acres.

In return, Datuk Law paid back RM88 million to Kua family for 17.08% stake in Hiap Teck.

It seem Datuk Law get Hiap Teik for free, instead, Datuk Law still get extra RM22 million from the deal in term of cash flow. this isn't the case if you are minority shareholder. Investment in Hiap Teik now become investment in Datuk Law's blast furnace project in Kemaman.

Another person that dispose off their old listed company and listed a new company is Mac family of Muhibbah Engineering (M) Bhd. Mac family disposed off Nam Fatt around same period of Kua family dispose off Wing Teik. the different is Nam Fatt survive last recession and only become (PN17) in 2010. Mac family also never dispose off Muhibbah Engineering (M) Bhd until to date. South Arfrican fast food chain Nando's Malaysian franchise are hold by Mac's daughther Mac Chung Lynn.

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