SINGAPORE & HONG KONG--(BUSINESS WIRE)--Buyer consortium (“the consortium”) led by Recco Control Technology Pte. Ltd. (“Recco Control Technology”) and Dazheng Group (Hong Kong) Investment Holdings Company Limited (“Dazheng Group”) today issued a statement regarding Hollysys Automation Technologies Ltd.’s (NASDAQ: HOLI) (“Hollysys” or “the Company”) update on its ongoing sale process and the shareholder request for a special meeting. Members of the consortium also include TFI Asset Management Limited, and Great Wall Capital Co., Ltd, who have entered into a memorandum of strategic cooperation with Recco Control Technology and Dazheng Group in connection with the proposed acquisition of Hollysys.
Hollysys’ statement on October 30, 2023, suggested that more than 30% of registered shareholders, as of the demand record date previously set by the board of Hollysys, have validly submitted a request for a special meeting. Despite the valid request from shareholders representing significant ownership in the Company, Hollysys has to date refused to call a special meeting.
The Hong Kong action referred to in Hollysys’ statement, which is founded on unproven allegations, has been brought by a group of senior employees of Hollysys Group Companies, Dr Changli Wang, the CEO, Chief Strategy Officer and a director of Hollysys, and Plus View Investments Limited against Ace Lead Investments Limited, a registered shareholder of Hollysys and Mr. Shao Baiqing seek an injunction preventing the board of Hollysys acting on the request for a special meeting served by Ace Lead Investments Limited.
Despite having suggested in their October 30 statement that more than 30% of registered shareholders have requested for a special meeting, the board of Hollysys has now indicated, conveniently after the Company’s own founder and senior management had brought an action in a Hong Kong court (the “Court”), to injunct the special meeting. It will only consider whether or not to call a special meeting after November 21, 2023, when the application is scheduled to be heard, and the Court has made its determination of that action. There is no certainty when the Court’s determination will be delivered and no account is taken of the possibility of an appeal by the unsuccessful party which could significantly delay the final determination of the application. It is impossible to predict when, if ever, the board of Hollysys will consider the request for a special meeting. This is prejudicing the rights and interests of all the shareholders who have requested the special meeting who hold more than 30% of the Company.
Under British Virgin Islands (“BVI”) law (which is the law governing the duties of the directors of Hollysys and the rights of the shareholders), the Hong Kong action is irrelevant to the obligations of the board of Hollysys to properly consider, in a timely manner, convening the special meeting which more than 30% of the shareholders requested as long ago as August 24, 2023. In light of the totality of the circumstances, the Board’s declaration that it will not act on the special meeting until a foreign court in Hong Kong has made final determination in a lawsuit brought by the Company’s own senior management amounts to nothing more than a concerted effort to frustrate the shareholders’ legitimate exercise of their fundamental right to have a special meeting convened.
The right of shareholders to meet is fundamental and unqualified. The consortium calls on the board of Hollysys to respect the rights of its shareholders and convene the special meeting immediately.
There is no legitimate reason for further delay by the Board.
UBS AG Hong Kong Branch is serving as financial advisor to leaders of the consortium, Recco Control Technology and Dazheng Group. Sullivan & Cromwell LLP and DLA Piper LLP are serving as U.S. legal advisors to the consortium. Conyers Dill & Pearman is advising the consortium on BVI law.
Recco Control Technology Pte. Ltd is a Singapore-incorporated investor in the automation industry and was founded by Mr. Ke Lei, a veteran in the automation industry in China.
Dazheng Group (Hong Kong) Investment Holdings Company Limited is a Hong Kong-incorporated financial investor founded by sophisticated entrepreneurs and investment banking professionals.
TFI Asset Management Limited is a Hong Kong-based asset management firm which is an indirect subsidiary of Tianfeng Securities Co., Ltd. (also known as TF Securities, SH: 601162).
About Great Wall Capital
Great Wall Capital Co., Ltd. is a Beijing-based private equity investment firm under China Great Wall Asset Management Co., Ltd., one of the four Chinese state-owned asset management companies.
Cautionary Statement Regarding Forward-looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “believe,” “envision,” “will,” “expect,” “anticipate,” “intend,” “estimate,” “plan” and similar expressions. Although the management of Recco, Dazheng, TFI and Great Wall Capital believe that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of any of Recco, Dazheng, TFI and Great Wall Capital, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Other than as required by applicable law, none of Recco, Dazheng, TFI and Great Wall Capital undertakes any obligation to update or revise any forward-looking information or statements. The information and opinions contained herein do not take into account the particular investment objectives, financial situation, or needs of any recipient and should not be construed as an offer to buy or sell or the solicitation of an offer to buy or sell the securities mentioned or an invitation to the public. Under no circumstances shall the information contained herein or the opinions expressed herein constitute a personal recommendation to anyone.