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Denise Tsang

THE fierce tussle between the two sons of Playmates Toys founder and chairman Chan Tai-ho is threatening to derail the family business.

   The long-running battle between brothers Albert and Thomas went to the high court last week when Albert filed a petition to wind up the parent company.

    Albert Chan Chu-wai is the second-largest shareholder in Chansam Investments, the parent company of Playmates Toys, and its associate Prestige Properties.

  He holds 32.5 per cent in Chansam through his company Waddington.

   Younger brother Thomas Chan Chun-ho - who owns a controlling 57.5 per cent stake in Chansam through Panchi Holdings - is furious and has challenged Albert's petition.

     Thomas is the managing director of Playmates Toys and Prestige Properties, which recently changed its name from Playmates Properties.

   Thomas has a higher stake in Chansam than his elder brother because he bought the holdings of their other brother, Allen, and their sister, Karen, a few years ago.

   Albert Chan's lawyer said the move to wind up Chansam came after Thomas allegedly forbade Albert from managing the two companies.

  If Albert's petition is successful, Chansam would have to sell the assets of the two listed subsidiaries in which it holds about 66.5 per cent. The parent company would then be declared bankrupt. Net assets of the two companies stood at $3.39 billion in December last year.

  In court last week, there were claims that Thomas treated the companies as his own business, destroying mutual trust and confidence among family members. Albert therefore left the companies as director in 1990.

   Proceedings are expected to last a couple of months.

  The two listed companies made stock exchange announcements saying the legal dispute should not directly affect their business.

   Conflict between Albert and Thomas came to light in May when Albert and his son Johnny Chan Kwong-ming failed in a bid to get on to the boards of Playmates and Prestige.

    At the annual meetings of the companies Albert's representatives opened debates on subjects ranging from plunging profits to management quality.

   Strong criticism was directed at debt burden and share options awarded to the four executive directors amid a sharp fall of net profit at the Prestige Properties' meeting.

   Criticism intensified at the Playmates Toys meeting over a decision to acquire Ideal Loisirs, a crippled French toy-making associate, which generated a $130.4 million provision and pushed the company into the red last year.

   Chairman and father Chan Tai-ho and Thomas Chan did not attend the meetings.

   A former insider who worked closely with the Chan brothers for the 13 years up to 1989 told Sunday Money the power struggle stemmed from the 60s when the family went into the toy business.

   The insider, also named Chan, who was supervisor at the Tuen Mun plant, said: 'I'm not surprised to see the litigation. It's a family which argues and fights.

   'Small Chan [Thomas] used to handle sales and marketing while Big Chan [Albert] managed everything, including cleaning,' he said. 'But Big Chan rarely had a say in making decisions.'    Listed in 1984, the holding company had golden years from 1990 to early 1993 after Teenage Ninja Mutant Turtles and Cricket hit the US market. Sales reached $4.13 billion and net profit $1.21 billion in 1990.

   In 1994 a business reshuffle saw Prestige Properties listed on the stock exchange and Playmates Toys spun off. As the turtles frenzy faded, Playmates Toys suffered a $97.59 million net loss last year.

   According to the Estimate Directory, the consensus for Playmates Toys net profit for the year to December is $178.1 million.

   With the downturn in the property market, net profit at Prestige Properties fell by 93.69 per cent to $8.22 million last year, its lowest since 1991.

     Mr Chan said he had 2,000 share options worth about $1.6 each which were granted before the business reshuffle in 1994, a bonus he did not intend to sell.

   On Tuesday Playmates Toys lost 12.37 per cent of its value to $1.70 while Prestige shed 2.6 per cent to $1.09. The two regained part of their loses. Playmates closed on Friday at $1.80 and Prestige at $1.10.

1966 - Chan Tai-ho establishes Playmates Toys 1970s - 'Playmates' brand name launched 1984 - Company listed as Playmates Holdings 1986 and 1989 - Launch of 'Cricket' and 'Teenage Mutant Ninja Turtles' 1990 - Playmates Toys becomes a promotional toy development and marketing company 1994 - Prestige Properties listed and Playmates Toys is spun off 



Battle ends in court for not-so-friendly Playmates