KUALA LUMPUR (Aug 3): BT Investment Capital Ltd, a minority shareholder of Main Market-listed ILB Group Bhd, formerly known as Integrated Logistics Bhd, has filed a lawsuit against the logistics services company and the company's board members in an attempt to block an acquisition that could dilute shares owned by existing shareholders.

In the originating summons filed by a Low Bok Tek on behalf of BT Investment Capital on Aug 2, it named the nine defendants as ILB, its chairman Datuk Karownakaran @ Karunakaran Ramasamy, chief executive officer Tee Tuan Sem, executive director Makoto Takahashi, non-executive directors Wan Azfar Wan Annuar, Datuk Wan Hashim Wan Jusoh, Soh Eng Hooi and Jamilah Kamal, as well as Impian Nuri Sdn Bhd.

It filed an application seeking a hearing at the Shah Alam High Court on Aug 17 to stop or cancel the proposed acquisition by ILB of nine parcels of commercial land with shop lots in Seksyen 19, Petaling Jaya, Selangor for RM15.9 million via the issuance of 37.78 million new shares in ILB.

In a separate statement on Wednesday (Aug 3), BT Investment Capital said the proposed issuance of the new shares will enlarge the number of issued shares to 232.81 million from the current 195.03 million.

"This move will dilute existing shareholding and does not create value for shareholders as ILB’s earnings per share and any dividends, rights, allotments or other distributions that ILB may declare will be negatively impacted. This dilution impact was announced by the board on July 15, 2022 on Bursa Malaysia," it said.

At the same time, the proposed transaction will create a new single largest shareholder in the form of the seller of the commercial parcel, Impian Nuri, which will have a 16.67% stake in ILB post-acquisition, it added.

BT Investment Capital also noted that the proposed 37.78 million new shares are equivalent to 19.37% of the current share base of ILB, just under the 20% general mandate.

"ILB’s board cited the 20% general mandate for the proposed transaction, which was announced by Bursa Securities on April 16, 2020 as a way to provide a relief measure to public listed companies that need to raise capital in a timely and cost-effective manner to be injected as working capital or for operational expenditure to sustain the business during the pandemic. This interim measure was allowed until Dec 31, 2021 and further extended to Dec 31, 2022.

"But contrary to the intention of this 20% general mandate, the proposed transaction does not result in funds being injected into the company, nor does ILB appear to need to raise cash as shown by its financial year ended Dec 31, 2021 annual report, which recorded a cash and bank balance of RM86.03 million," it said.

According to ILB's annual report 2021, Tee is the single largest shareholder with a 15.91% stake in ILB, followed by Urusharta Jamaah Sdn Bhd (10.85%), Etern Group (HK) Co Ltd (9%) and Takahashi at 7.57% as at end-February 2022.

At noon break, ILB shares were untraded. The stock last closed at 49 sen, bringing the company a market capitalisation of RM95.56 million. Its share price has risen 28.95% so far this year.