Bangkok, 23 April 2020 – SEC advises the shareholders of Eureka Design Public Company Limited (UREKA) to study information and exercise the voting right at the annual general shareholders’ meeting regarding the subsidiary’s plan to invest in tap water supply projects with the Provincial Waterworks Authority (PWA). In this regard, the independent financial advisor views that the shareholders should not approve the projects.
UREKA will hold the annual general shareholders’
meeting on 30 April 2020 to seek approval for the investment of its subsidiary
Ureka UU Co., Ltd. (UU) in two water supply projects to produce and sell tap
water to the PWA Panatkikom Branch at the investment value of 237 million baht.
To raise fund for this investment, UREKA will raise capital through a rights
offering of common shares and seek a loan from a financial institution. The Board
of Directors and the Audit Committee view that the investment in such projects can
generate long-term consistent income and the contract party is a highly stable
government entity. In addition, the Eastern Economic Corridor Promotion Policy
could potentially drive the demand on tap water in the project area. Thus, this investment also creates a good
opportunity to continue doing business in the project areas.
However, the independent financial advisor has the
opinion that the shareholders should not approve the projects due to an
uncertainty of the funding attained. Meanwhile, the supporting bank is still
considering the loan for the company and the capital
raised from rights offering depends on the right exercising of the existing
shareholders. In addition, UU has not affixed the binding signature on the
acquisition of a land for water supply plant construction and the leasing of wetlands
for water production. Therefore, there is a risk of the inability to construct the
plant and to comply with the obligations of the water supply contract with PWA.
SEC therefore advises the UREKA shareholders to study the information carefully
and exercise their voting right to protect their own interest as well as seek
clarification from the company’s executives to gather complete information for
decision making. In any case, due to the spread of the novel Coronavirus
disease (COVID-19), shareholders should consider
proxy voting through the independent directors instead of attending the meeting
in person and send questions to the company prior to the meeting date.
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