Directors deny oxygen to shareholders

All independent and minority shareholders (IMS) of Ceylon Oxygen Ltd (COL) unanimously opposed all resolutions (except for donation to charity) moved by the directors at the AGM and EGM meetings on May 30.

They included the adoption of the balance sheet and statements, as well as the election of directors and auditors, and the grossly unethical and illegal delisting of the COL shares effectively on May 7.

All IMS had unanimously decided, while also disputing the valuation, to appeal to the SEC and CSE to cancel the delisting of COL shares and afford a free market for the shares; ultimately report to the head offices of Actis and CDS.

Former Chairman of the Ceylon National Chamber of Industries K. C. Vignarajah with an abiding interest in protecting the rights of the independent and minority shareholders has brought to the notice of SEC and CSE several important issues pertaining to COL to also maintain the value and integrity of the Sri Lankan stock market. He said that any action that would frustrate this, would be against the public interest as well as those of the IMS.

The controlling shareholder Specialist Gases (Pvt) Ltd., (SGL) had offered to buy each share at Rs. 225. According to him, IMS felt that it was gross undervaluation of the share, and they will fight for Oxygen.

He wrote to SSP Corporate Services, the Secretaries, to get a copy of the minutes of the meetings, a list of all shareholders with their addresses together with the number of shares held and a list of the shareholders who attended the meetings. SSP Corporate Services were nervous to the extent of seeking permission of the Directors of Ceylon Oxygen Ltd, to even give the list of shareholders who attended the meetings.

Vignarajah said that the company secretaries should be empowered by law to act with transparency and independence, especially when the rights of all shareholders need to be upheld.

In May last year the 70.8% majority shareholding of Ceylon Oxygen Ltd. (COL), was purchased by SGL which is controlled by Actis South Asia Fund. Actis is majority funded by CDC Group Plc of UK, which has managed and funded private sector companies as part of its lofty "mission of investing in the industrial development of developing countries."

A shareholding democracy, equitable in the widest sense, is the ideal of the free world and must be nurtured by all institutions. 'Delisting' is in contempt of the lofty mission which the CDC Group Plc of UK was entrusted with. Its representatives at COL have totally misread the mandate; the manner in which they had set about to defraud independent and minority shareholders, is reprehensible.

The original shareholding (30% by the public, employees 10% and the majority foreign investor 60%), had a healthy image and positive effect on the concept of Private Public Partnership (PPP).

The public's trust is now rudely shaken by the gradual encroachment of the majority shareholder into an absolute control situation and trying to delist this important company which has virtual monopoly in many products, in a manner which not only tramples on the interests of the public, and of the independent and minority shareholders, but also deprives IMS of a free and open market in which to trade their shares.

It is unconscionable to have sought subscription to the shares from the public when the element of risk was high, and now when the prospects are excellent to manouvere their ouster by purchasing the shares of IMS; worst when done without telling them the real value.

The balance sheet does not give a "True and Fair" view of the Net Assets of the company.

What is the proper valuation of assets? What are the extents of Land, Location and values? Only on repeated questioning, did the Chairman say that among others, are 4 Acres (640 perches) with 12,000sq.ft. building in Colombo, and one acre (160 perches) at Sapugaskande carried at a total value of a mere Rs. 17 million in the Balance sheet.

Here alone the shareholders opined that there was an under valuation. This is without revaluing other assets or the great value of Goodwill and Brand name, nor the immense value of the virtual monopoly of its products.

Low liquidity of COL in the share market was an excuse trotted out by COL; The gradual acquisitions by SGL really caused this low liquidity. (The Value of outstanding shares with IMS was more than Rs. 100 million).