Only a seasoned businessman like Rin Kei Mei would seek the appointment of eight new directors to the board of a bank before even getting Bank Negara Malaysia’s approval.

All board members of financial institutions are carefully vetted by Bank Negara before they can assume their posts. It takes up to a month or more to determine whether they are “fit and proper” to be a board member.

But to ensure that the eight candidates are acceptable to Bank Negara, Rin has proposed the names of people who are already board members of financial institutions or are holding important positions in organisations that are regulated by the central bank and the Securities Commission Malaysia (SC).

His thinking is that if these people are already holding key positions, they cannot be rejected by Bank Negara.

A common thread running through these candidates is that five of them are serving as board members of insurance companies. Of the three other candidates, one is a board member of a bank, one a commissioner in the SC and one a member of a recognised mutual fund.

“Directors being appointed to insurance companies go through the same stringent process as banks. So, it would be odd if the directors were given the go-ahead to be on the board of insurance companies but not on the board of a bank,” says an official close to Rin.

“The regulations do not allow the same director to sit on the boards of two banks but they do not stop a director of an insurance company from sitting on the board of a bank.”

The appointment of new board members will still need to go through Bank Negara but their names can be submitted for shareholders’ approval while the vetting process is going on.

Rin has a 15.4% stake in EON Capital Bhd but he works closely with Tan Sri Tiong Hiew King, who has a 17.11% stake. Effectively, Rin controls some 32.52% of the banking group.

The 74-year-old Rin is known for maximising the value of his investments while Hong Leong Bank’s Tan Sri Quek Leng Chan is not known to be generous in his acquisition of assets.

“Deals like this get him [Rin] thinking all the time. So far, Rin has played the cards to put him in the driver’s seat to negotiate with Hong Leong,” says the official.

In the past, Rin has displayed his uncanny knack of selling at a high price only to come back into the company at a lower price.

For instance in January 1997, before the stock market meltdown, he sold down his interest in Edaran Otomobil Nasional (EON) when the stock was more than RM22 each. He bought back the shares at a fraction of the cost in 2000 and by December 2002, had accumulated 10.34% in the company.

Before the crisis, Rin had also sold his interest in Proton Bhd when the price was high.

As for EON, the Singaporean later upped his stake to 12.11%, which proved to be a crucial block in preventing DRB-Hicom Bhd from privatising the company.

In January 2008, DRB-Hicom, then under the control of Tan Sri Syed Mokhtar Al-Bukhary, offered to take EON private by offering RM2.10 per share. But Rin’s Kualapura Sdn Bhd did not take up the offer together with some institutional funds.

The move paid off because EON later declared a special tax-exempt dividend of RM1 and gross dividends amounting to 23.5 sen. Two weeks ago, DRB-Hicom offered RM1.55 per share via a selective capital repayment to take the company private. Hence in total, Rin would get more than RM2.75 per share for holding out.

It was the same with Perusahaan Sadur Timah Malaysia Bhd (Perstima), a company he co-founded with his Japanese partners in the 1970s. Rin exited the company in 1993 when it was trading at more than RM7 per share. Later, Perstima came under the control of Amin Shah Omar Shah and Soh Chee Wen.

In 2000, private company Versalite Sdn Bhd pumped new capital into a troubled Perstima via a restricted issue and ended up with a 79% stake. Last year, Rin’s son Nan Yoong emerged as a 50% shareholder of Versalite, which has since pared down its interest in Perstima to 32.85%.
Considering Rin’s track record, will he settle for RM7.10, the price offered by Quek?

An official close to Rin says that during the EONCap board meeting, Rin felt that the offer should be tabled to shareholders to decide on.

“Rin may have felt that the offer was too low but he could not afford to disagree because he knew he was outnumbered on the seven-member board. He played his cards such that he would not be seen to agree with Primus,” says the official.

But when Rin is in the driving seat, the situation may change because he is known for holding out for a better price.

This article appeared in Corporate page of The Edge Malaysia, Issue 792, Feb 8 – 14, 2010