Shareholders of the US$150 million Malaysia Equity Fund (MEF), who last month voted to sack most of its board, are refusing to pay a $2.7 million bill incurred by the old board when it was trying to defend itself.
MEF, which is listed in London, but managed in Hong Kong by Daiwa International Capital Asset Management, is now open-ended, and has suffered shareholder redemptions as a result of the fund's poor performance.
Existing shareholders, who wish to stay invested in the fund however, are smarting at the large bill it has inherited. ING Barings is asking for most of the money, after its corporate finance arm advised the old board on its failed defence. Daiwa is also owed a portion of the funds, and the old board's public relations advisers.
Peregrine Securities (UK), the London arm of Hong Kong's Peregrine Investments, which mounted the successful raid on the fund, and netted about $3 million from the deal, is now advising the new board on its complaint against Barings.
Last week, ING Barings' chairman Hessel Lindenburgh, was sent a letter of complaint from Graham Barker, MEF's new chairman calling the bill excessive, particularly since the old board's proposals commanded such little support.
Initially Peregrine commanded 50.2 per cent support for its proposals. In the final vote, only 5 per cent of shareholders did not want to open-end the fund, and only 12 per cent opted for no change to the board as advocated by ING Barings. A total of 19 per cent of shareholders voted for the old board's proposals.