Align Partners: "Stick Investment's Attempt at Arbitrary Disposal of Treasury Shares Is Inappropriate and Regrettable"

Moves to Defend Management Control Through Sale of Treasury Shares
Stick Investment: "No Specific Plans to Utilize Treasury Shares"
Align Partners: "No Consideration for Protecting Interests of All Shareholders"
"Board Review Results Must Be Disclosed by November 14"

Align Partners Asset Management, an activist fund currently in conflict with Stick Investment over the cancellation of treasury shares, has expressed its regret toward Stick Investment.

On November 5, Align Partners issued a statement titled "Align Partners’ Position on Stick Investment’s Treasury Shares," saying, "While we, as the third-largest shareholder, along with minority shareholders and other investors, have long requested the cancellation of treasury shares, it is inappropriate and regrettable that Stick Investment publicly announced it is reviewing ways to secure growth momentum through its treasury shares."

Previously, on November 2, The Asia Business Daily reported that Stick Investment was pursuing a plan to secure friendly forces by selling its treasury shares to defend management control.

In response, on November 3, Stick Investment stated, "This is not true, and we have not made any such decision. While we are reviewing various ways to utilize treasury shares to secure growth momentum for the company, we do not have any specific or finalized plans at this time." Align Partners subsequently issued its position on the matter.

Align Partners pointed out, "The arbitrary disposal of treasury shares to third parties based solely on a board resolution, without considering the interests of all shareholders, could be interpreted as a violation of directors’ fiduciary duties under the revised Commercial Act. If the purpose is to raise funds for mergers and acquisitions (M&A), sufficient capital can be secured through alternative means such as using existing cash, borrowing, or a paid-in capital increase."

They added, "Treasury shares should first be cancelled to enhance shareholder value, and other alternatives should be prioritized. Only if unavoidable, a paid-in capital increase should be considered, as this would be more beneficial to the company and all shareholders in terms of reducing capital-raising costs compared to utilizing treasury shares."

Align Partners also referenced ongoing discussions in the National Assembly regarding the third amendment to the Commercial Act, which includes mandatory cancellation of treasury shares, stating, "At a time when the political and financial authorities are pushing for fundamental improvements to the treasury share system, any attempt by the company to arbitrarily dispose of treasury shares to strengthen the controlling shareholder’s influence could be seen as an effort to circumvent the application of the upcoming third amendment to the Commercial Act."

Align Partners demanded, "We request confirmation that Stick Investment’s board is not considering the arbitrary disposal of treasury shares, as well as the disclosure of specific plans for disposal or cancellation of treasury shares, and shareholder value enhancement measures, along with the board’s review results, by November 14." They added, "In the near future, we also plan to distribute a public shareholder letter containing comprehensive recommendations from Align Partners for enhancing Stick Investment’s corporate value."

Align Partners is a leading activist fund that has actively engaged in corporate management under the banner of enhancing shareholder value and improving corporate governance. In March, it newly acquired a 6.64% stake in Stick Investment and disclosed the stake as a simple investment.

On October 30, Align Partners announced that it had changed its purpose for holding shares in Stick Investment from "general investment" to "influencing management control," thereby increasing pressure. It also increased its stake by 0.99 percentage points, raising its total holdings to 7.63%.