PETALING JAYA: The hearing on the lawsuit against Alliance Bank Malaysia Bhd brought by the Goh family, the former owner of Goh Ban Huat Bhd (GBH), will start in the High Court of Kuala Lumpur today.

The lawsuit is related to the alleged force-selling of a substantial block of GBH shares by Alliance Bank in September 2006.

Over two years ago, after the Goh family lost control of the century-old ceramic ware business, it filed suit against Alliance Bank’s force-selling of the big block of shares that were pledged to the bank for third party loans.

The lawsuit was filed by the family’s investment vehicle, Ceremtec Sdn Bhd.

The loss-making GBH attracted attention when businessman Tan Sri Robert Tan Hua Choon made a takeover offer to buy out the ceramic ware manufacturing business that the family had owned and operated for three generations.

Tan offered to take over the company at RM1.25 per share. The takeover offer was launched in June 2009 after Tan got hold of a 30.45% stake in GBH.

The Goh Ban Huat factory in Jalan Segambut which sits on a valuable piece of land due to its location in the vicinity of the prime upmarket Mont'Kiara.

Apart from the loss-making ceramic manufacturing business, the prime asset in GBH is the parcel of land where its manufacturing plant is situated. Property consultants view the 5.92ha largely freehold tract of land in Jalan Segambut, Kuala Lumpur, as having long-term development prospects due to its location in the vicinity of the prime upmarket Mont’Kiara.

Two months after his initial offer, Tan revised his offer price to RM1.50 per share. After Tan gained control, the board of GBH undertook a rights issue coupled with new warrants in April last year.

Tan now controls GBH with 74.4% equity interest. The Goh family has ceased to be the substantial shareholder.

Tan first surfaced as a substantial shareholder of GBH in December 2006. Filings with Bursa Malaysia show that Tan bought 6.68 million shares, or a 10.79% stake, through a married deal.

Coincidentally, this was shortly after a block of GBH shares was allegedly force-sold in September 2006 by Alliance. The filings with Bursa Malaysia showed that Ceremtec sold 11.42 million shares, or an 18.4% stake, via an off-market transaction on Sept 26, 2006.   

The shares owned by Ceramtec were pledged to the bank between 2000 and 2005 to support a third party loan.

This left Ceremtec with 9.87 million shares, or a 15.94% stake, according to the announcement.  

This relegated it to the position of third largest shareholder after Tan and Lembaga Tabung Angkatan Tentera (LTAT), which had an 18.19% stake at that time.

In the heat of the takeover tussle, the reclusive Tan issued a statement explaining that the offer was made so as to have greater participation and management control in the business of the GBH group and to preserve shareholder value, which was being eroded by eight years of losses out of the last nine years leading to 2008.

GBH, which was founded in 1895, was hit by high energy costs, a slump in domestic demand and keen competition from manufacturers from China.

GBH returned to the black for 9MFY11 ended Sept 30. The company posted a net profit of RM360,000 compared to a net loss of RM2.35 million a year before.

Revenue rose 7% to RM32.1 million, due to improved sales margins and production efficiencies.

While the dramatic tussle for GBH seems to have been under the radar since the second half of 2009, when Tan took over the company, the ongoing court case between Ceremtech and Alliance reminds us that, that it is not over yet.

This article appeared in The Edge Financial Daily, February 20, 2012.