Sat, Nov 27, 2004 - Page 11 News List

Firms queue up to bid for Fuhwa Holding Co

CONFLICT An aggressive bidding war for Fuhwa Financial Holding Co may be in the works as rival executives battle to assume control of the company

By Joyce Huang  /  STAFF REPORTER

An upcoming boardroom battle to take over the helm of Fuhwa Financial Holdings Co (復華金控) appeared to surface following reports that Chinatrust Financial Holding Co (中信金控) is rumored to have bought out Central Investment Holding Co (中央投資).

Central Investment, owned by the opposition Chinese Nationalist Party (KMT), has a 19 percent stake in Fuhwa.

If that 19 percent stake is secured, Chinatrust Financial, led by Jeffrey Koo (辜濂松), will be the biggest shareholder in Fuhwa, which is capable of competing with other shareholder-rivals to take over its management next year.

The upcoming proxy vote war at Fuhwa will be similar to tactics used by Koo's second son, Angelo Koo (辜仲瑩), earlier this year to oust Diana Chen (陳敏薰) from the chairman's post at China Development Financial Holding Co (開發金控).

In April, Angelo Koo, whose KGI Securities Co (中信證券) has more than a 6.2 percent stake in China Development, teamed up with the Ministry of Finance -- which has a 7 percent stake in China Development -- to secure the majority of seats on China Development's board while toppling Chen at the same time.

Since government-owned shares in Fuhwa total over 14 percent, Chinatrust Financial may still have to seek cooperation from the finance ministry in the upcoming boardroom fight, slated to be in the middle of next year.

But Finance Minister Lin Chuan (林全) rejected the likelihood of government-owned shares partnering with any KMT-affiliated shareholders despite the fact that Central Investment deal would go through smoothly should Chinatrust Financial buy it.

Asked whether the finance ministry will support Chinatrust Financial's bid in any future fight for Fuhwa's management, Lin said "it's too early to say," adding that the ministry may not follow the example of the China Development's boardroom battle.

Yet it is still unclear whether Chinatrust has bought the former KMT reinvestment firm, Lin said yesterday.

"If Chinatrust does and fails to tell investors, the company's corporate governance performance is flawed," he said.

"However, if the Koo family uses its own pocket money instead of corporate capital to acquire the company, they are not obliged to disclose the deal to the public," he said.

Since Central Investment is not a publicly traded company, the government has no authority over its trading, although the finance ministry is concerned whether the sale of Central Investment will complicate the ministry's efforts in recovering the bulk of KMT assets that were stolen during their 50-year rule, Lin said.

Meanwhile, Yuanta Core Pacific Securities Co (元大京華證券), the nation's largest brokerage, also expressed an interest in taking over Fuhwa after having bought more than 8 percent of its shares on the open market, according to media reports.

The brokerage's chairman, Rudy Ma (馬志玲), on Wednesday told reporters that the company may seek support from the finance ministry's 14 percent to take over Fuhwa, while his son, Ma Wei-chien (馬維建), also vowed to increase its stake in Fuhwa to 20 percent.

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