Malaysia EON Capital delays EGM on Hong Leong merger

KUALA LUMPUR, June 22 (Reuters) - Malaysian lender EON Capital EONP.KL will delay an extraordinary general meeting to vote on a merger with Hong Leong Bank (HLBB.KL) after a key shareholder filed a lawsuit to block the deal, an EON Capital source said.

The delay comes after Hong Kong-based private equity fund Primus Pacific Partners, EON Capital's biggest single shareholder with a 20 percent stake, said on Monday it had filed a lawsuit alleging the 5.1 billion ringgit ($1.60 billion) offer that would create Malaysia's sixth biggest lender, was unlawful.

"The EGM date will not be announced today, it will be announced at a later date," a source, who asked not to be named because he is not authorised to comment, said on Tuesday.

EON Capital had been expected to announce the date of the EGM on Tuesday.

EON Capital said late on Monday that it would seek legal advice over the suit. The firm declined to comment on Tuesday but will hold its annual general meeting on Tuesday where it is expected to address the issue.

The delay may put the deal in jeopardy after Hong Leong said late on Monday that it may walk away from the deal if it does not have shareholder approval by August 15.

Hong Leong first attempted to buy out EON Capital in January when it offered 4.92 billion ringgit but EON Capital's board rejected the offer because it considered it too low.

Hong Leong launched a second offer after EON Capital appointed new board members and Primus said the new board members acted in the interest of some shareholders against the interest of others.

In 2008, Primus paid 9.55 ringgit per EON Capital share for its 20 percent stake, well above the 7.30 ringgit Hong Leong is currently offering. ($1=3.186 Malaysian Ringgit)

(Reporting by Balazs Koranyi; editing by Liau Y-Sing)