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Stephen Seawright

Construction firm Shun Cheong Holdings has been served with a writ by a disgruntled shareholder again following its second attempt at a share placement in four months.

In the High Court yesterday Shun Cheong was prevented from conducting the placement until a full hearing of the case next week, according to the plaintiff George Kwok Shun-on. The case was heard in chambers.

Mr Kwok is the second-largest shareholder in Shun Cheong with a 12.61 per cent stake and is a former director of the firm.

Shun Cheong shares were suspended yesterday morning pending an announcement about 'a legal proceeding against the company'.

The shares closed on Thursday at 27 HK cents. At the end of last month Shun Cheong formed a plan to issue 77 million new shares at 20 HK cents each - the equivalent of 19.92 per cent of the company's issued share capital.

The writ argues that a decision to place shares taken by Shun Cheong's board of directors on September 25 was void.

The writ also seeks an injunction to force the directors to hold a special general meeting this month at which a resolution has been proposed by Mr Kwok to prevent directors from issuing new shares.

The special general meeting and the annual general meeting are scheduled for December 7.

Mr Kwok is also seeking a ruling that no share placement can take place until the meeting has been convened.

An injunction is also sought to restrain the company and its directors from taking any actions 'for the purpose of changing the control of Shun Cheong Holdings until the holding of the general meetings'.

The writ names Shun Cheong and three of its directors as defendants including chairman James Wong Sai-wing.

In July, Mr Kwok mounted a successful legal challenge to prevent a similar Shun Cheong placement. In the wake of his action Mr Kwok was fired from the board of directors.

Chinney Alliance Group is Shun Cheong's the biggest shareholder, with a 25.1 per cent stake. Mr Wong, is the largest shareholder in Chinney Alliance.

If the latest placement proceeds it is expected to raise net proceeds of HK$15.3 million which is to be used for working capital by Shun Cheong and a subsidiary.

Directors of Shun Cheong declined to be interviewed about the placement.

Shun Cheong made a loss attributable to shareholders of HK$35.41 million for the year to the end of March on turnover of HK$832.78 million. The year before the company made a profit of HK$32.02 million, from a turnover of HK$705.97 million.



Shareholder again steps in to try and thwart Shun Cheong placing