Terry Tham says he is in E&O for the long haul

PETALING JAYA: The managing director (MD) of Eastern & Oriental Bhd (E&O) Datuk Terry Tham Ka Hon (insert pic) has said that buying the shares of the company at a premium to the market price was firm indication of his commitment to see through the progress of the property developer.

He hopes that the purchase of the 110 million shares would dispel the notion that he would no longer be part and parcel of the company when his term as MD comes under review in August.

“I’m here for the long haul. I am not about to retire. I will also be giving an option to my top management to purchase an equity stake in the company to enjoy the fruits of its success,” told StarBiz in an interview.

The 61-year-old Tham entered into an agreement to acquire the block at RM2.90 per share from Sime Darby Bhd, a transaction that will cost him RM319mil, on Wednesday.

The announcement to the stock exchange stated that Tham had the option of inviting the senior management of E&O to participate in the purchase of the block of shares that make up 9.9% of the property developer.

Tham said the core team in E&O comprised 16 people who have been with him for many years and have played a role in building up the company from an entity with a market capitalisation of RM150mil to RM3bil over the years.

“The team has been intact since I sold down (in 2011) … now they will have an opportunity to make money as well when the company makes money. It would be a shame to build this team and see them leave,” he said.

In August 2011, Tham and two other major substantial shareholders collectively sold 30% of E&O to Sime Darby at RM2.30 per share. The other two shareholders in the deal that drew criticism were Tan Sri Wan Azmi Wan Hamzah and GK Goh Holdings Ltd of Singapore.

Sime Darby purchased the 30% block at RM2.30 when the market price was less than RM1.70.

The transaction drew criticism on several fronts. It ranged from Sime Darby allegedly circumventing a mandatory general offer (MGO) on E&O to allowing Tham and the other two shareholders to cash out at a price that was a premium to the market.

The pricking issue of an MGO came about because Tham would continue to remain as MD of E&O with 5.1% after the entry of Sime Darby. Hence, Sime Darby and Tham were perceived to be parties acting in concert.

However, the Securities Commission, after much deliberation ruled in October 2011 that Sime Darby and Tham were not parties acting in concert and that the conglomerate need not undertake an MGO.

An actuary by qualification who joined the construction industry by accident, Tham said that he had approached Sime Darby to purchase the stake in view of his three-year term as MD was falling due in August this year.

“I had to make a decision. I believe the company is attractive. So, why not put in more money in an investment that I believe in?” said Tham.

E&O has carved a niche for itself as a developer of high-end properties. The jewel in its portfolio of assets is the Seri Tanjung Pinang project on the island of Penang that is built on reclaimed land.

After the success of the first phase of the project, the company is working on starting its second phase by early next year, assuming all approvals are obtained.

The second phase involves reclaiming 760 acres, of which some 60 acres are to be given to the Penang state government.

Apart from the 60 acres, as part of the agreement to the land reclamation concession, E&O is also to claim 130 acres in Gurney Drive for the state government.