Cambodia and Vietnam focused property investment group JSM Indochina Ltd (AIM: JSM) said that the requisition of an EGM by 13.66 percent shareholder Passport Capital LLP represents a significant cost and distraction to the company at a time when the focus should be on looking at investment opportunities.
In a statement, it said the board is unanimously recommending that shareholders vote against the Passport resolutions that they will be presented with at the meeting called for November 26, including the removal of JSM chief executive Craig Jones, finance director Rowell Tan and chairman Michael Tanner and replacing them with Passport nominees.
The board continues to believe that company's current strategy is in the best interest of shareholders to achieve growth and development.
When it requisitioned the EGM in October, Passport said it was is concerned that the board has approved and extended unsecured loans to CEO Jones which are not in line with the company's investment policy, and claimed that the £135 million raised in JSM’s July 2007 IPO have not been fully invested as envisaged.
In today’s statement CEO Jones said: “To date, our investments have been sound and our NAV is positive, at US$1.08 it has grown from US$0.93 in 2007. The managers are confident that it was correct not to aggressively invest nor to lock in construction contracts in markets that were clearly falling. However, during that time, we have been proactive in sourcing distressed investment opportunities and lower cost construction contracts, which should produce greater shareholder value. This policy now sees this company's assets substantially committed.”
We are currently focussed on distressed residential projects in Ho Chi Min City. An example of this is our recently announced Xi River View Palace Project; foundations are complete, the towers are ready for construction and completion is scheduled for Summer 2011. This project could produce swift above market returns. This investment is indicative of the company's strategy, he said.
Regarding the recent announcement of its plan to move to the main board of the London Stock Exchange, he said the move would allow the company to engage a wider audience of potential shareholders, giving JSM Indochina exposure to Index fund buying. “Moving to the main board of the LSE brings with it further corporate governance which this company welcomes, The EGM called by Passport has unfortunately placed plans for this move on hold,” Jones added.
JSM shares have rallied over 150 percent from December 2008 lows and held firm this morning, ticking up during afternoon trade.