Unhappy Reunion Likely In Pteris Global’s Upcoming Annual General Meeting

The Annual General Meeting season starts soon! And while different investors might be looking forward to their own favourite AGMS, one of the most exciting meetings to follow would have to be that of Pteris Global’s (SGX: J74), which takes place on 25 April 2014.

Pteris Global is an airport logistics systems provider. So, things like baggage handling, in-flight catering, air cargo handling, and express courier handling are all areas under its purview. But while it provides a vital service in the air transport industry, the company has fallen on hard times and had been experiencing losses for years.

Therefore, in a bid to save itself and turn its fortunes around, Pteris Global had proposed a reverse takeover deal earlier this year to acquire Shenzhen-CIMC Tianda Airport Support Ltd from China International Marine Containers Ltd.

Shenzhen-CIMC Tianda Airport Support is a manufacturer, installer, and maintenance-service-provider of airport and seaport equipment such as passenger boarding bridges, air cargo handling systems, and baggage handling systems among others. If the deal goes through, Shenzhen-CIMC Tianda Airport Support will become a 75% owner of Pteris Global.

However, there’s a big issue with the deal itself: There are major disagreements between shareholders and directors regarding the deal.

One of Pteris Global’s major shareholders, Mr. Winston Tan, is against the deal and has even called for an extraordinary general meeting to remove the other directors and take control of the company himself. However, he has not disclosed any particular plans he has for the company and the banks – who are currently providing a lifeline to Pteris Global by supplying funds for the company to continue its operations – has declared that they will stop their financing if the RTO does not go through.

As of the company’s latest records, China International Marine Containers owns about 15% of Pteris Global with other supporters of the RTO, Mr. Low Kok Hua and Dr. Soon Kong Ann, owning 6.3% and 4.3% of the company respectively. Meanwhile, Mr. Wilston Tan (who’s against the deal) and his wife Mdm. Amy Lim, collectively controls only 10% of the company.

Other shareholders of Pteris Global seem to be caught between a rock and a hard place. On one hand, they face the risk of having their shareholdings in the company being diluted massively with the RTO and on the other, they face the threat of Pteris Global going bankrupt .

It will be interesting to watch how this battle will turn out as Pteris Global has a diverse shareholder base without any clear majority owners. In fact, the boardroom battle might even morph into a proxy fight.

In any case, whichever way shareholders choose to vote, they have to realise that the company is burning cash, fast. Interestingly, despite the company’s poor results and inability to generate cash, it is still trading at about 2 times book value at its current share price of S$0.138.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.