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SINGAPORE – Mr. Kwek Leng Peck resigned from his position as a non-executive and non-independent director of City Developments Ltd (CDL), a position he held for more than 30 years, after clashing with the real estate giant’s board and management.
Kwek, 64, is the cousin of Kwek Leng Beng, the billionaire CEO of CDL who also runs the Hong Leong group of companies, and the uncle of CDL group CEO Sherman Kwek.
In his resignation letter, Mr. Kwek Leng Peck cited “disagreements with the board and management regarding the group’s investment in Sincere Property Group and its continued provision of financial support to Sincere,” according to a company presentation to the Singapore Stock Exchange during the midday trading break on Wednesday (October 21).
Their reservations were also mentioned with the group’s focus on the management of Millennium & Copthorne Hotels (M&C). CDL took M&C private last year, and the British company was subsequently delisted from the London Stock Exchange.
CDL said the group’s total investment in Sincere includes a 51% venture capital investment in Sincere of 4.4 billion yuan (S $ 896.8 million), the underwriting of bonds issued by Sincere for $ 230 million. (S $ 311.7 million) and a working capital loan of 650 million yuan.
In addition, the group also provided a liquidity support commitment totaling 1.5 billion yuan in connection with the bonds issued by Sincere due next Monday, and a corporate guarantee of 1.5 billion yuan in connection with an external bank loan. Obtained by Sincere. The total of these investments is $ 1.9 billion.
“Sincere’s liquidity position is challenging, being severely affected by the Covid-19 pandemic and property cooling measures that caused further tightening of liquidity for real estate companies in China, the most recent being the Three Red Lines. from China, “CDL said.
This refers to metrics regarding debt that developers will have to meet if they want to borrow more.
“The planned asset divestment plan for some of Sincere’s commercial, hotel, office and retail park assets is now expected to ease its debt burden on investment property exposure and underpin its residential development plans. as a key strategy to transform this platform take place over a longer period of time due to the current climate, “said CDL.
The board is in the process of identifying and appointing an outside financial advisor to assist with a further evaluation and review of the group’s investment in Sincere. The impact on the group or its financial reports will be prepared and calibrated in conjunction with the external financial advisor, CDL said.
M&C is a wholly owned subsidiary of CDL that owns, manages and operates more than 145 hotels around the world. M&C, listed on the London Stock Exchange in 1996, was delisted on October 11, 2019 following a privatization exercise by the CDL.
“2020 has been a difficult year for the hospitality and tourism sector. In the first half of 2020, the Group’s hotel operations segment posted a substantial pre-tax loss of $ 208.2 million, which included $ 33, 9 million impairment losses in view of the current pandemic. ” CDL said.
Kwek Leng Peck’s departure from CDL took effect on Monday. He is a board member of 81 other companies as of Monday, including major shareholders of CDL Hong Realty (Private) Limited, Hong Leong Holdings Limited and Hong Leong Investment Holdings Pte Ltd.
Shares of CDL fell 55 cents, or 7.2 percent, to $ 7.08 at the close on Wednesday, after resuming trading around 1:30 p.m. The company had requested a ceasefire before the stock market opened on Wednesday.
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