KARACHI: In a strongly worded rebuttal to a notice issued by Hum Network Ltd (HUMNL), the JS Group has denied that it is involved in any large-scale acquisition of shares of the media conglomerate and has nothing to do with the sharp share price volatility seen by the conglomerate.
“The allegation that JS Group and Kingsway Capital (which is completely separate and independent of JS Group) are acting in concert at the forthcoming elections are denied as baseless and without any merit whatsoever,” says a letter written by the group to the Managing Director of the Pakistan Stock Exchange on Aug 17.
“It is vehemently denied that the JS Group is acting in concert with any shareholder of HUM,” the letter states. “JS Group is not supporting any individual in the upcoming election of directors of HUM,” it continues.
HUMNL has an Extraordinary General Meeting (EOGM) on Aug 22, in which seven directors have to be elected. On Aug 13 the company announced that eight of the 15 individuals who had served notice of intent to stand for director in the elections had been found to be “ineligible”.
In an earlier notice to the stock exchange, the company had announced that it has observed unusual share purchasing activity and had reasons to fear that it was under hostile takeover from the JS Group, claiming that seven members who had filed their papers to stand for election seemed to have a relationship with the JS Group.
HUMNL claimed in its original notice to the stock exchange that large number of its shares seem to have been purchased by a company called Aitkenstuart Pakistan Pvt Ltd (APPL) and Kingsway Capital, a London based investment fund. The JS Group strongly denied it had any links to either of these parties.
Kingsway has been a large minority investor in HUMNL since 2014. Difference arose between Kingsway and HUMNL management, prompting the former to write to the Securities and Exchange of Pakistan (SECP) on three occasions. “[T]he recent & abrupt changes [HUMNL] has made to its registrar from the Central Depositary Company, a major institution, to an unknown registrar, FD Registrar, just prior to an election of the board of directors is quite alarming and speaks to the intent of the company,” says the last of these letters written on Aug 4, a copy of which is available with Dawn.
“[W]e fear that the company’s management is taking steps such as a change of registrar to either create circumstances where an election cannot take place or hold an election that is unfair to shareholders” the letter continues. One week later HUMNL disqualified eight out of 15 people who had filed papers to stand for election to the board. Of the seven left, four were already on the company’s board.
Relations between the London-based investor and HUMNL management seemed to have frayed much earlier though. Kingsway had complained earlier about “the related party transactions where a growing percentage of the content used by HUM was being purchased from MD Production, a company related to the CEO of the company through his spouse.”
Published in Dawn, August 20th, 2020