Buyer Consortium Led by Recco Control Technology and Dazheng Group Comments on Shareholder Having to File an Application in the British Virgin Islands High Court for an Order for a Timely Special Meeting of Shareholders to be Held

By: Recco Control Technology Pte. Ltd. via Business Wire

December 07, 2023 at 07:44 AM EST

A beneficial owner of Dazheng, has had to file an application in the BVI High Court to have a timely special meeting held

Buyer consortium (“the consortium”) led by Recco Control Technology Pte. Ltd. (“Recco Control Technology”) and Dazheng Group (Hong Kong) Investment Holdings Company Limited (“Dazheng Group”) today commented on the legal action having to be taken in the British Virgin Islands (“BVI”) High Court for an order that a timely special meeting of shareholders of Hollysys is held so that shareholders can decide the composition of the board of directors (“Board”) of Hollysys and for an injunction to restrain the Board from entering into any definitive agreement for the sale of Hollysys before the special meeting has been held. The action was taken by the beneficial owner of Dazheng Group. The legal action is necessitated by the announcement by the Board that it intends to hold a special meeting of shareholders (“Special Meeting”) in the week of January 22, 2024, after it has executed a definitive agreement for the sale of Hollysys.

Announcing that the Special Meeting will be held in the week of January 22, 2024, while indicating that the Board hopes to execute a merger agreement by mid-December 2023, amounts to a complete disregard for what shareholders want and would render the Special Meeting futile. The consortium maintains that to ensure the sale process is one that is legitimate and maximizes shareholder value, rather than one which favors management, the Board must hold the requested Special Meeting before it concludes any definitive agreement to sell the Company. An injunction is being sought as a protective measure to preserve the status quo so that a timely and meaningful shareholder meeting can be held. Otherwise if the Board continues on its planned course of action it will directly frustrate the clear wishes of the shareholders.

The consortium reminds shareholders of the history of shareholders requesting a special meeting and the Board’s continued delaying tactics:

On August 23, 2023, over 32% of Hollysys shareholders served a notice of the intention to request a special meeting to be held;
On August 24, 2023, over 32% of Hollysys shareholders served a request for a special meeting;
On October 20, 2023, over 31% of Hollysys shareholders again served a request for a special meeting;
On October 30, 2023 in a Hollysys press release, the Board acknowledged the request for a Special Meeting by nearly a third of shareholders, but decided to delay any further action until late-November, citing a Hong Kong injunction hearing as the reason for delay
On November 6, 2023 Ascendent Capital Partners, who owns 13.7% of Hollysys, publicly requested that the Board hold a special meeting by December 1, 2023;
On November 22, 2023 the Board of Hollysys announced that the Special Meeting of shareholders requested by certain shareholders will only be held during the week of January 22, 2024.; and
The beneficial owner of Dazheng has filed an application in the BVI High Court for an order that a timely special meeting of shareholders be held and for an injunction to temporarily halt the sale process until the special meeting has been held.

Advisors

UBS AG Hong Kong Branch¹ is serving as financial advisor to leaders of the consortium, Recco Control Technology and Dazheng Group. Sullivan & Cromwell LLP and DLA Piper are United States counsels to the consortium. Conyers Dill & Pearman is advising the consortium on BVI law.

About Recco

Recco Control Technology Pte. Ltd is a Singapore-incorporated investor in the automation industry and was founded by Mr. Ke Lei, a veteran in the automation industry in China.

About Dazheng

Dazheng Group (Hong Kong) Investment Holdings Company Limited is a Hong Kong-incorporated financial investor founded by sophisticated entrepreneurs and investment banking professionals.

About TFI

TFI Asset Management Limited is a Hong Kong-based asset management firm which is an indirect subsidiary of Tianfeng Securities Co., Ltd. (also known as TF Securities, SH: 601162).

About Great Wall Capital

Great Wall Capital Co., Ltd. is a Beijing-based private equity investment firm under China Great Wall Asset Management Co., Ltd., one of the four Chinese state-owned asset management companies.

Cautionary Statement Regarding Forward-looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “believe,” “envision,” “will,” “expect,” “anticipate,” “intend,” “estimate,” “plan” and similar expressions. Although the management of Recco, Dazheng, TFI and Great Wall Capital believe that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of any of Recco, Dazheng, TFI and Great Wall Capital, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Other than as required by applicable law, none of Recco, Dazheng, TFI and Great Wall Capital undertakes any obligation to update or revise any forward-looking information or statements. The information and opinions contained herein do not take into account the particular investment objectives, financial situation, or needs of any recipient and should not be construed as an offer to buy or sell or the solicitation of an offer to buy or sell the securities mentioned or an invitation to the public. Under no circumstances shall the information contained herein or the opinions expressed herein constitute a personal recommendation to anyone.

¹ UBS AG is incorporated in Switzerland with limited liability.