The Sword of Damocles

In our attempt to sniff out the devil in those announcements made thus far by Lii Hen, we stumbled on some blemished details that would otherwise look like a perfectly normal announcement. According to the public shareholdings spread announcement of Aug 30, 2004, beside the shortfall of 1.786%, the number of public shareholders holding not less than 100 shares is 1,616 shareholders.

Through the second public shareholdings spread announcement made on October 18, 2004, Lii Hen disclosed that the number of public shareholders holding not less than 100 shares had dipped below the Bursa Malaysia requirement of 1,000 shareholders to only 960 shareholders, according to the Record of Depositors as at October 8, 2004. While acknowledging that its public shareholdings spread is still below the 25% requirement, the company did not provide an absolute percentage or number this time around, however. The catch now is why they veiled it?

Beano, we completely understand now the old saying of numbers never lie. The number of days between the first (August 30, 2004) and second (October 18, 2004) announcement of public shareholdings spread is a mere 49 days, oh no it is 10 days less at 39 days because the number of 960 shareholders was based on the Record of Depositors on October 8, 2004 according to the second announcement. It is a shocking revelation that Lii Hen had just seen its number of shareholders shrunk from 1,616 shareholders to 960 shareholders in 39 days! A jaw dropping disappearance of 656 shareholders or a whopping 40.59% in 39 days.

Coming back to the catch. If the number of shareholders can diminished by 40.59% within a short span of just 39 days, it may not be illogical to assume that the shortfall of the number of public shareholders of Lii Hen had spiked up tremendously. It is also not unreasonable to assume that judging by how meticulously the announcements are made to masked the percentage of shortfall, the devil of shortfall could be the pivotal and all important 10% mark. Under the Listing Requirements of Bursa Malaysia, an immediate suspension of trading will be imposed on any listed issuer having a less than 10% public shareholdings spread.

It may now explain why did the board of Lii Hen is risking themselves to create multiple false and misleading announcements, relentlessly. They have not only the smoking gun, but they also have now the sword of Damocles in the guise of this 10% threshold.

Lets leave to the wisdom of our regulators to deal with the carpenters with a gun and a sword. We are more eager to find out the disappearance of 656 shareholders in 39 days. Remember the powerful propellent that sent the stock price of Lii Hen skyward after the UMA announcement on August 10, 2004? Now, casting the pierced bluff of the carpenter in the form of the 10% shortfall threshold against the backdrop of the UMA announcement, it is obvious that some unseen hands are behind the disappearance of these 656 shareholders.

Enter Siow Chung Peng. He first made his declaration as a substantial shareholder of Lii Hen as defined under the Bursa Malaysia regulations on July 10, 2004 with a combined interests of 4,617,700 shares. He boosted his stake to 7,043,300 shares on August 9, 2004, a day before the UMA announcement. Between the UMA announcement on August 10, 2004 and Lii Hen's first announcement of public shareholdings spread on August 30, 2004, another 1,015,000 shares was added for a total of 8,058,300 shares. He then held a stake of 8,250,550 shares as reported on October 19, 2004.

Through a filing of Form 29A Notice of Substantial Shareholder on October 18, 2004, another new substantial shareholder in the name of Siow Chung Lin emerged with a combined interests of 4,161,850 shares in Lii Hen. We understand that he is the younger brother of Siow Chung Peng. At this point, the Siow brothers held a combined 12,220,150 shares or a 20.37% stake.

Are the brothers the unseen hands behind the disappearance of the 656 shareholders? On one hand, we have no reason to doubt so simply by looking at these announcements. On the other hand, the question we must ask now is why are they buying out all the available shares of Lii Hen frantically in 39 days?

In our calculations, the older Siow would have had a much cheaper price for his stake of 7,043,300 shares as at August 9, 2004, before the propellent was ignited by the UMA announcement, whilst that of the younger Siow comes with a much higher price considering his much later declaration of substantial shareholding. Mind you, Lii Hen was trading in the range of RM 5.50 to RM 6.00 in early October 2004, therefore the expected bounty had gotta be spectacular in view of the chips deployed.

The Siows' phrenitis and the carpenters' demeanour on how the announcements are made culminated to our eventual discovery of the antidote in a single announcement.

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