A Malaysian court may have stopped Carrefour from leaving the country following a suit by its local Bumiputera partner, Tan Sri Aziz Shamsuddin.
Aziz, who holds 30 per cent of Carrefour through Hartajaya Harmoni Sdn Bhd, claims he is being oppressed by the French retailer that wants to cash out of Malaysia, court documents show.
The former minister of rural and regional development managed to get an injunction on November 12 from the Shah Alam High Court. This prevents Carrefour from buying his 30 per cent stake.
Six days later, the French retailer cancelled plans to sell its Malaysian business due to low bids and promised to invest and expand instead. That was also the same day that Carrefour, which wanted to remove the injunction, decided to withdraw its application.
Instead, it is appealing but a hearing date has yet to be fixed.
Carrefour, which operates under the name Magnificient Diagraph Sdn Bhd (MDSB), sold a 30 per cent stake in the company to Hartajaya in January 26, 2010. Under Malaysian rules, a foreign retailer must have a 30 per cent local partner.
Hartajaya is majority owned by Tan Sri Aziz Shamsuddin.
Court documents obtained by Business Times revealed that Aziz bought the stake for RM23 million using a RM23 million 10-year loan from Carrefour. The shares were used as security.
On November 4, Carrefour decided to exercise a call option to buy back the stake for the same amount.
Aziz claimed that as an investor, it would not make sense for Hartajaya to buy 30 per cent in MDSB for no return on investment. The remaining 70 per cent is owned by Carrefour Netherland BV (CNBV) (26.06 per cent) Carrefour Malaysia Sdn Bhd (9.33 per cent) and Mildew BV (34.61 per cent).
Aziz, who was made Carrefour’s consultant in 2008, was also instrumental in helping Carrefour grow its business in Malaysia. In 2008, the retailer only had nine stores. Since Aziz came on board, it has doubled the number and has submitted for five new hypermarket sites and seven hypermarket licences.
He argued that Carrefour’s call option is an act of oppression against a minority shareholder. This is the main legal suit.
Accordingly, an injunction was sought to keep the status quo until the main case is settled.
The High Court granted the injunction in an open court session on November 12. It restrained Carrefour from transferring 115.71 million shares (the 30 per cent block) to CNBV, pending completion of the main suit.
Carrefour argued that it had a contractual right to exercise the call option as there were special circumstances, which refers to its planned sale of the Malaysian business to the best bidder.
“It is within (Hartajaya’s) knowledge that the purpose of the call ... was to facilitate the project where the majority shareholders of MDSB propose to sell 100 per cent of the shares in the said company to the bidder with the best bid,” Carrefour said in its affidavit.
In addition, Carrefour said if the injunction is maintained and becomes public knowledge, there is a high probability that bidders may pull out.
Its losses would include the e1 million (RM4.11 million) spent on consultancy fee for the sale, reputational loss since the sale had been widely publicised and the loss of opportunity to secure another good bid of up to RM3.6 billion (estimation for Thailand, Malaysia and Singapore businesses) even if the sale plan was revived - Business Times
Aziz, who holds 30 per cent of Carrefour through Hartajaya Harmoni Sdn Bhd, claims he is being oppressed by the French retailer that wants to cash out of Malaysia, court documents show.
The former minister of rural and regional development managed to get an injunction on November 12 from the Shah Alam High Court. This prevents Carrefour from buying his 30 per cent stake.
Six days later, the French retailer cancelled plans to sell its Malaysian business due to low bids and promised to invest and expand instead. That was also the same day that Carrefour, which wanted to remove the injunction, decided to withdraw its application.
Instead, it is appealing but a hearing date has yet to be fixed.
Carrefour, which operates under the name Magnificient Diagraph Sdn Bhd (MDSB), sold a 30 per cent stake in the company to Hartajaya in January 26, 2010. Under Malaysian rules, a foreign retailer must have a 30 per cent local partner.
Hartajaya is majority owned by Tan Sri Aziz Shamsuddin.
Court documents obtained by Business Times revealed that Aziz bought the stake for RM23 million using a RM23 million 10-year loan from Carrefour. The shares were used as security.
On November 4, Carrefour decided to exercise a call option to buy back the stake for the same amount.
Aziz claimed that as an investor, it would not make sense for Hartajaya to buy 30 per cent in MDSB for no return on investment. The remaining 70 per cent is owned by Carrefour Netherland BV (CNBV) (26.06 per cent) Carrefour Malaysia Sdn Bhd (9.33 per cent) and Mildew BV (34.61 per cent).
Aziz, who was made Carrefour’s consultant in 2008, was also instrumental in helping Carrefour grow its business in Malaysia. In 2008, the retailer only had nine stores. Since Aziz came on board, it has doubled the number and has submitted for five new hypermarket sites and seven hypermarket licences.
He argued that Carrefour’s call option is an act of oppression against a minority shareholder. This is the main legal suit.
Accordingly, an injunction was sought to keep the status quo until the main case is settled.
The High Court granted the injunction in an open court session on November 12. It restrained Carrefour from transferring 115.71 million shares (the 30 per cent block) to CNBV, pending completion of the main suit.
Carrefour argued that it had a contractual right to exercise the call option as there were special circumstances, which refers to its planned sale of the Malaysian business to the best bidder.
“It is within (Hartajaya’s) knowledge that the purpose of the call ... was to facilitate the project where the majority shareholders of MDSB propose to sell 100 per cent of the shares in the said company to the bidder with the best bid,” Carrefour said in its affidavit.
In addition, Carrefour said if the injunction is maintained and becomes public knowledge, there is a high probability that bidders may pull out.
Its losses would include the e1 million (RM4.11 million) spent on consultancy fee for the sale, reputational loss since the sale had been widely publicised and the loss of opportunity to secure another good bid of up to RM3.6 billion (estimation for Thailand, Malaysia and Singapore businesses) even if the sale plan was revived - Business Times
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