F&N Looking For New Investments

Source : The Business Times, February 1, 2008

WHILE the current stockmarket turmoil and high prices of raw materials are sources of concern, they also provide opportunities for investment, and Fraser & Neave is on the lookout for such opportunities, the company's new chairman said yesterday.

Former SingTel CEO Lee Hsien Yang, in his first appearance before shareholders as F&N's chairman at its annual general meeting yesterday, was responding to a shareholder's question on the impact of the current market volatility and high oil and other raw material prices on F&N.

Mr Lee said these were risks for any company and F&N mitigates the impact in several ways including securing part of its supplies at reasonable cost ahead of time, through proper foreign exchange management and by passing on part of the costs to customers.

'Sometimes turbulence means opportunities to make investments at good prices, and F&N is looking for new investments, especially in the food and beverage sector,' he said.

As he had done at SingTel, Mr Lee effortlessly dealt with a slew of questions. He must have been pretty convincing, as all nine resolutions - including one to combine his consultancy fee of $1 million together with his normal fees of $250,000 as chairman - were passed without a single opposing vote from any of the 200-odd shareholders present.

As Securities Investors Association of Singapore (SIAS) president David Gerald put it: 'He is now chairman of F&N, one of Singapore's largest conglomerates . . . F&N is a leading pan-Asian F&B company with 125 years of heritage. It has a ready and fantastic platform to globalise its business . . . With the amount of work he is going to do as chairman, you just have to remunerate him sufficiently . . . If his past record at SingTel is anything to go by, shareholders should watch this space for things to happen and F&N's transparency to improve markedly.

'During the transitional period, pending the appointment of the new CEO, Mr Lee is undertaking the huge task of acting CEO and chairman of the group. The fees of $1 million payable to him is, therefore, not commensurate with his expected contributions and efforts. He deserves more.'

Mr Gerald also felt that the $3 million paid to board member Nicky Tan's company nTan for broking Temasek Holdings' investment in F&N was proper, as the company got a good deal.

Mr Lee assured shareholders that the company would improve its corporate governance, which he described as a 'constantly evolving' process.

On the ongoing case against subsidiary Asia Pacific Breweries by two European banks which are seeking to recover some $100 million in loans made to a former finance manager, Chia Teck Leng (who has since been convicted and jailed for defrauding the two banks and two others of millions of dollars), F&N said no provisions had been made other than for legal fees. Mr Lee said the company would 'vigorously' defend itself against the banks' accusations.

No shareholder expressed interest in the company's quest for a new CEO. But Mr Lee told reporters after the AGM: 'I have no desire to stay on as acting CEO or executive chairman for long.' He said the company would announce a new CEO in 'due course'.

As to why he joined F&N instead of taking up any of the numerous other offers, he quipped: 'I thought it would be a fun company to join.'