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By John Helmer, Moscow

The fight by China Inc. to keep control over the flow and price of manganese into Chinese refineries, and out of the hands of pesky international shareholders, has moved into Round-3 after Rounds 1 and 2 turned into bruising knockdowns.

OM Holdings (OMH) — a Singapore-based manganese miner and metals refiner with mainland Chinese control shareholders — faces a new challenge from minority Australian and Singaporean shareholders, who formally announced today their call for an emergency general meeting (EGM) and the election of a new board of directors. A shareholder meeting and vote should be called by August 15 in Singapore.

Among those targeted by the move, the minorities have called for the removal of Low Ngee Tong, the executive board chairman of OMH, whose attempt to list OMH shares on the Hong Kong Stock Exchange failed early this month. Low, his wife Heng Siow Kwee and their allies in Singapore and in China control an estimated 60% of the shares. As a candidate to replace Low, Australian lawyer and investment banker Malcolm McComas has been proposed.

Low is directly accused in today’s releases to the Australian Stock Exchange (ASX), where OMH shares are listed and regulated, of acting in ways that are “inconsistent with good corporate governance.” OMH is chartered in Bermuda, where the governance rules are softer than the island’s beach-sand.

The shareholder rebellion is being led by Gennady Bogolyubov, an international manganese mining magnate based in Kiev, London, and Perth, Western Australia. He owns Consolidated Minerals, which, like OMH, mines manganese in northwest Australia, shipping mostly to buyers in China. Bogolyubov’s subsidiary, Stratford Sun, owns an 11.7% stake in OMH. At least 20% of the shareholders are reported to be backing the EGM and board spill. At OMH’s annual general meeting in Singapore on April 20, 35% of the shareholders voted against the proposal of Low and his board directors to hold an initial public offering (IPO) on the Hong Stock Exchange, diluting most of the minorities to insigificant stakes. In a separate ballot against a board share option plan, 45% of the shareholders voted their opposition.

One of the proposed beneficiaries of that options issue, board director Tan Peng Chin, a lawyer in Singapore, has been challenged today by a replacement candidate, Peter Debnam, a 17-year career politician and former Leader of the Opposition in the New South Wales parliament.

According to a statement issued by Stratford Sun today, it is calling for the new board election because “it has had serious concerns over the lack of transparency in the conduct of the existing board of directors of the Company”, and because under Low’s leadership, OMH’s board “has led the Company down a path of systemic value destruction. lt has adopted strategies that have consistently failed to deliver growth and has presided over a period of significant share price decline.”

According to the release, from the March 27 announcement of the proposed Hong Kong IPO until July 4, when the plan was abandoned, OMH’s share price dived by 35%, “reaching the lows previously only seen at the depths of the global financial crisis.”

When OMH told the ASX on July 5 that it was abandoning the IPO plan, it said: “In light of the unfavourable market conditions, global market volatilities, the current state of the manganese market and the Company’s recent share price performance, the Board has now formed a view that the proposed dual listing is not currently in the best interests of the Company and has decided to discontinue with its plans to pursue a dual listing on the HKSE.”

Sources in Hong Kong have revealed that shareholder resistance to the planned sale of 345 million new shares, 69% of the current share issue, diluting the minorities, triggered the share price collapse, accompanied by investigations by Australian and Hong Kong regulators. Sources in Melbourne and Hong Kong claim investigators continue to probe shareholding evidence that at least 50% of the OMH shares are held through nominees and trust arrangements by unidentified interests believed to be based in mainland China.

Non-disclosure of these control interests was one of the hurdles for getting approval of the IPO by the Hong Kong Stock Exchange. In Canberra, investigations are reportedly focusing on whether the attempted IPO constituted an attempt to transfer the Australian mining assets to a foreign group without authorization under Australia’s Foreign Asset and Takeovers Act and by the Canberra-based Foreign Investment Review Board.

In today’s statement to the ASX, Stratford Sun said: “the Board and the senior management of the Company have not been diligent in ensuring disclosure of the ownership in, or control over, shares in the Company and the identity of key stakeholders as required under relevant securities laws and the Bye-laws of the Company.” Yet to be corroborated by the Australian and Hong investigations is the name of one of the key stakeholders, well known in both Hong Kong and Beijing.

Stratford Sun, and Bogolyubov’s Consolidated Minerals group have also applied to the Federal Court of Australia in May for a ruling to block the listing attempt, alleging lack of proper disclosure and violations of Australian law. The court in Sydney has yet to rule.

Earlier this month OMH said it was considering “a number of strategic alternatives”. One of these is described as “the potential de-merger of the Company’s smelting and marketing/trading businesses from the Company’s existing mining operations.”

The Singaporean and Australian minorities who had opposed the Hong Kong IPO reacted negatively, with sources among the minority shareholders claiming this is “a new way of removing asset value from the listed company in Australia to offshore companies, principally China-based businesses.” OMH operates trading companies in Singapore, Tianjin, Shanghai and elsewhere, and a ferromanganese refinery at Guizhou (in Qinzhou city, Guangxi province).

In today’s announcement of the board vote challenge, the Boglyubov group said “the attractiveness and viability of the stand alone mining business with a sole customer and trading/smelting business with a sole supplier is doubtful.” Attacking OMH’s latest proposal, shareholders have been urged to vote for new OMH leadership to prevent “further erosion of shareholder value.”

OMH’s share dropped 2% in ASX trading on Monday, and is currently at A$1 per share, making a market capitalization of A$504 million. Before the September 2008 crash in global steel and manganese prices, OMH was trading at A$2.30 per share, with a market cap of A$1.2 billion.

OMH chief executive Peter Toth reacted fiercely to today’s board election call, telling a Perth newspaper the EGM move is part of “an endless supply of legal and corporate antics to frustrate, slow down, undermine and de-stabilise the company from executing its strategic initiatives at a critical point in time…The Company remains laser focused and rock solid in its efforts to execute its operational and strategic initiatives for the benefit of all of OM’s shareholders”.

Speaking for the Consolidated Minerals group, Oleg Sheiko said: “the record of value destruction is visible for all to see in the market place. The only rock Mr Toth is speaking of is the one that has been sinking so fast that $655 million in capital value has been lost in the past three years; $323 million sacrificed this year alone.”

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