Oasis seeks Yingde board seat to add independent voice amid boardroom tussle

Oasis Management, with 4.5 per cent of Yingde Gases, said it wants an independent board seat

PUBLISHED : Monday, 27 February, 2017, 10:12pm
UPDATED : Monday, 27 February, 2017, 11:27pm

Yingde Gases Group said one of its institutional shareholders has requested board representation, in a move to add an independent third party between two groups of feuding founding shareholders of the company, which may become the target of the largest American takeover of a Chinese company in a decade.

Oasis Management, a Cayman Islands-based investor with 4.5 per cent of Yingde, said it wants to send an “independent representative to the newly constituted board after shareholders cast their votes” during a March 8 shareholders meeting in Zhuhai.

“Regardless of the ultimate outcome, Oasis will look to have an independent representative to observe the board and ensure the process to consider such strategic alternatives” including a possible sale of the company, Oasis said. “This process must be run with genuine intent to maximise value for all shareholders in order for minority shareholders to make an educated decision with their holdings.”

Yingde, one of China’s largest suppliers of industrial gases to steel mills and chemical plants, has been mired in a bitter tussle since a November boardroom coup expelled two co-founders from among its directors.

Oasis is pushing for an independent third party between the feuding sides, as former chairman and chief executive Mark Sun Zhongguo and former chief operating officer Trevor Strutt seek to return to Yingde’s board. The board is now chaired by Zhao Xiangti, one of Yingde’s three founding shareholders.

Yingde-Air Products war of words adds uncertainty to corporate drama

A publicity representative of Zhao would not comment on Oasis’ statement, but said the board remains “focused on the selling process and maximising shareholders’ value.” Zhao was formerly in charge of Yingde’s finances, while Sun and Strutt were responsible for strategy setting and operations.

Yingde exists in a highly competitive industry that’s been the subject of consolidation and restructuring in recent years.

A representative for Sun and Strutt said they welcomed Oasis’ request for board representation.

Air Products & Chemicals Inc., an industrial gas supplier based in Pennsylvania, has made a non-binding offer to buy Yingde over at a premium to the Chinese company’s share price, after its boardroom row broke into the open.

A report by the Institutional Shareholder Services Inc., which provides corporate governance advice to institutional investors, said a completely indepenent board would better help Yingde’s shareholders sell the company at the best price.

“It appears that the establishment of a wholly independent board would represent the highest chance of negotiating an outcome that maximise value for unaffiliated shareholders,” said the Maryland-based service.

Understanding the Yingde Gases corporate drama

Another report by Glass Lewis said Sun and Strutt are “best positioned” to oversee the sale process, Bloomberg reported. It recommended shareholders to vote against a March 8 motion to remove Sun and Strutt, and instead vote to remove Zhao.

Under the resolutions presented to shareholders to be voted in two separate extraordinary meetings on March 8, Sun and Strutt will only have the chance to return to the executive board if shareholders vote against their removal and vote in favour to remove Zhao.

If they vote in favour to remove all of the three founders, Zhao may still have a chance to gain indirect control of the board, given the two independent non-executive directors remaining in the board are perceived to side with him and have previously voted in a board meeting to strip Sun and Strutt’s executive roles.

Yingde’s shares have soared despite the boardroom fight, surging as much as 90 per cent in the last year to HK$5.33 on Monday.