Minority shareholders of the property developer say the proposed privatisation plan is 'derisory' Investors in property developer Pacific Concord Holdings have complained to the Securities and Futures Commission (SFC) about the controlling shareholder's proposed privatisation at a 'derisory offer price'. The letter by Chelsea Securities director James Filmer-Wilson suggested the firm may have already devised the privatisation plan before it announced worse-than-expected annual results at the end of April which caused the share price to plunge 12.65 per cent that day. Less than three weeks after the firm announced annual earnings of $81.02 million - about half the interim profit figure - the stock was suspended for the privatisation plan to be announced. 'One may question whether [a] a profit warning should have been issued, during the early months of 2003 even if not before, and [b] the privatisation proposals were genuinely formulated ... only after the results announcement and not beforehand,' Mr Filmer-Wilson wrote. Mr Filmer-Wilson represents about 20 investors with a combined 0.3 per cent stake in the firm. Last month, Pacific Concord chairman Wong Sai-chung offered 65 cents a share for the 42.98 per cent of the firm held by independent shareholders. On Tuesday Mr Wong announced that the offer price would not be increased. The offer is a 70.29 per cent discount to net asset value but a 51.16 per cent premium to the share price before the proposal was announced. The stock rocketed after the privatisation was announced and closed last week at 61 cents. Mr Filmer-Wilson said he hoped the independent financial adviser would outline how much money could be made for minority shareholders by alternatives to privatisation such as selling certain assets. 'In our view, it is blindingly obvious that such alternatives would be preferable for the minority shareholders to being bought out at the derisory offer price,' Mr Filmer-Wilson wrote. The letter raised the concern that in such privatisations some shareholders may secretly act in concert with the buyers, which contravenes securities regulations. Only shareholders unconnected with the buyer are permitted to vote on a privatisation. Mr Filmer-Wilson also expressed 'deep misgivings' about the resignation of former stock exchange executive Herbert Hui Ho-ming as an independent non-executive director four days before the stock was suspended for the privatisation plan to be announced. The letter suggests Mr Hui's resignation may have been to avoid a public clash with Mr Wong. Independent non-executive directors have to advise minority investors in such transactions whether the proposed deal is in their best interests. 'With his experience as head of the listing division at the Hong Kong Stock Exchange, Mr Hui was well-placed to offer minority shareholders an experienced view of the proposal,' Mr Filmer-Wilson wrote. 'Given the timing of his resignation, we can only infer that he too was unable to support the proposal, and accordingly resigned to save the majority shareholders embarrassment.' Pacific Concord's announcement of Mr Hui's resignation last month gave no reasons for his departure. 'Mr Hui's replacement, Mr Cheung Chuen-ying, is not known to us at all, and appears not to be a director of any other company registered in Hong Kong [except one dormant entity],' Mr Filmer-Wilson claimed. An SFC spokesman could not comment on whether it had received the letter. On privatisations in general the spokesman said: 'In a privatisation deal the shareholders can make a decision whether or not to accept and it is really not for the SFC to make a determination on the merit of a privatisation offer. 'Of course we will make sure that full disclosure is made.'