Details on TWG Tea co-founder v Osim

Details on TWG Tea co-founder v Osim

Monday, Feb 24, 2014

The Straits Times

THE way the much-heralded link between TWG Tea Company and lifestyle giant Osim International descended into a bitter stand-off between key shareholders has been detailed in legal papers obtained by The Straits Times.

The dispute, set for a showdown in the High Court, seems to have been ignited by failed expectations among stakeholders.

Documents filed in the court also show that the “bad blood” between TWG Tea co-founder Manoj Mohan Murjani and other shareholders appeared to have been brewing for some time.

Mr Murjani now wants the court to reverse moves by Osim that have given it control of the firm. He and The Wellness Group filed a writ of summons in the High Court on Monday against the other shareholders and directors of TWG Tea.

They ask that the issuance of TWG shares to Osim and an Osim unit, Paris Investment, be set aside. They also want The Wellness Group to get back its shareholding percentage in TWG Tea.

Other parties involved in the suit include Osim chief executive Ron Sim and Mr Taha Bouqdib, also a co-founder of TWG Tea.

The firm was launched in Singapore in 2007 by Mr Murjani, Mr Bouqdib and his wife Maranda Barnes. Mr Murjani and The Wellness Group had ambitious plans for TWG Tea, including local and international expansion. They looked for investors and were approached by Osim, which proposed a joint venture, among other things, according to the court papers.

Osim bought an initial 35 per cent stake in the gourmet beverage company in April 2011. It lifted that to 45 per cent in July, then 53.7 per cent in October last year, and raised it again to 70 per cent last month.

The court papers detailed TWG Tea’s expansion plans, which included how Osim’s management team was to help the firm grow and how the firm would provide funding. A joint venture was set up for expansion into North Asia, for example, with Osim committing to TWG Tea that the move would add a significant portion to revenues by 2013.

However, The Wellness Group notes that projections of new outlets in various markets fell short of expectations.

It also claims in the court papers that Osim directors led TWG Tea to supply to the joint venture at below franchise price, lowering TWG Tea’s profits.

The papers also contend that Osim directors prevented TWG Tea or the joint venture from expanding, and if not for their actions, TWG Tea’s profitability for the 2013 financial year would have been much higher.

The Wellness Group is claiming that the reduced profit meant that Osim could exercise its rights to take an increased shareholding in TWG Tea, at the expense of The Wellness Group.

It said in a separate statement on Monday that “the other shareholders and directors of TWG Tea have conspired to injure the interests of The Wellness Group by diluting its shareholdings in TWG Tea and enabling Osim to take control over TWG Tea”.

The Wellness Group claims Osim and its directors had assured it that Osim “had no interest in taking a majority stake in TWG Tea and the expansion of TWG Tea would be financed by debt”.

Mr Murjani also alleges that Osim, Mr Sim and Mr Bouqdib conspired to remove him as TWG Tea chief executive, even as a shareholders’ agreement implied that he would stay in the position for five years from March 24, 2011.

He cites two e-mails from Mr Sim – one to call for a board meeting reviewing Mr Murjani’s position, and another stating Mr Sim’s concerns about not knowing Mr Murjani’s schedule and a lack of financial discipline.

Mr Murjani, who denies the allegations made in the e-mails, resigned in 2012 as TWG Tea director and its chief executive, a post that paid him $45,000 a month.

Mr Murjani also notes the lack of support from Mr Bouqdib, who took over as TWG Tea chief executive on Sept 28, 2012. He adds that since his resignation, Mr Bouqdib has represented himself as the sole founder of TWG Tea.

He claims in the court papers that he has “suffered loss and damage”, including losing his salary as TWG Tea chief executive.

Osim said on Monday that it is seeking legal advice to refute the claims and to file a counter-claim against The Wellness Group and Mr Murjani.

A pre-trial conference is scheduled on March 26.