Petitioners pursue BEA through courts

An unfair prejudice petition has been presented in the Court of First Instance of the High Court of Hong Kong against The Bank of East Asia, Limited (BEA) according to a July 18 filing by the company on the Hong Kong Stock Exchange.
The petitioners request BEA to declare that two separate agreements with regard to a Japanese and Spanish bank were made ‘without due regard to the interests of shareholders’.
Alternative means
The petitioners: Elliott International, L.P. The Liverpool Limited Partnership and other companies associated with them are protesting a share purchase deal BEA conducted with the Japanese banking and financial services company Sumitomo Mitsui Banking Corporation SMBC) last year.
The purchase deal, made in March 2015, is a US$848.4 million (MOP6.7 billion) subscription agreement between BEA and SMBC for the purchase of 222.6 million BEA shares at a sale price of HK$29.
At the time, BEA stated it intended to apply the net proceeds as ‘general working capital and for future expansion of the Bank’s business’.
The petition protests that the deal was ‘passed for an improper purpose, without due regard to the interests of all shareholders of the Bank or the alleged adverse impact of SMBC Subscription on all shareholders’, adding the deal was made ‘without critical appraisal of the merits and competing arguments in respect of the same and alternative means for raising capital.’ Deal refusal
With regard to the Spanish bank – CaixaBank – the petition demands that the BEA board declare that its decision to amend a Strategic Investment Agreement between the two banks and a Strategic Collaboration Agreement between BEA, the Spanish bank La Caixa and its financial services company CaixaBank on January 2016 ‘was passed for an improper purpose’ without taking shareholders’ interests into consideration.
The petitioners also demanded that the bank ‘take steps forthwith’ to release a further Spanish banking entity – Criteria Caixa – from its Strategic Investment Agreement with CaixaBank as well as SMBC from its obligations in relation to its Investment Agreement with BEA and ban the bank from making ‘similar agreements in the future without leave of the court’.