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Wed, Oct 21, 2020 – 3:06 PM
The non-executive and non-independent director of CITY Developments Limited (CDL), Kwek Leng Peck, left the real estate giant on Monday, citing running its British hotel arm and investing in a Chinese company.
Kwek, 64, resigned after more than three decades in office.
He stated in his resignation letter that he disagreed with the board and management regarding the group’s investment in Chinese real estate firm Sincere Property Group, as well as its continued provision of financial support to Sincere.
He also had reservations with the group’s focus on managing the London-based wholly-owned subsidiary Millennium & Copthorne Hotels (M&C).
Mr. Kwek also resigned as a director of M&C, coinciding with his resignation from the parent company.
He is the cousin of CDL CEO Kwek Leng Beng and the uncle of CDL Group CEO and CEO Sherman Kwek.
Mr. Kwek Leng Peck is also a director of the substantial shareholders of CDL Hong Realty (Private) Limited, Hong Leong Holdings Limited and Hong Leong Investment Holdings Pte Ltd. Including these three companies, he held management positions in about 80 entities as of Monday.
In a stock exchange presentation on Wednesday, CDL noted that its investments in Sincere totaled about S $ 1.9 billion.
These include a 51 percent joint venture equity investment in the latter in the amount of 4.4 billion yuan (S $ 896.8 million). It had also subscribed to bonds issued by Sincere worth $ 230 million and granted a working capital loan of 650 million yuan.
Investments also include a 1.5 billion yuan liquidity support commitment provided by CDL for Sincere’s bonds due October 26, 2020, as well as a 1.5 billion yuan corporate guarantee in connection with an external bank loan. Obtained by Sincere.
“Sincere’s liquidity position is challenging, as it was severely affected by the Covid-19 pandemic and property cooling measures that caused further liquidity adjustment for real estate companies in China,” CDL said.
As a result, the asset divestment plan for some of Sincere’s retail, hotel, office and business park assets is now expected to run for a longer period, he added.
The plan is intended to ease Sincere’s debt burden on investment property exposure and underpin its residential development plans to transform its platform.
CDL said Wednesday that it is in the process of identifying and appointing an outside financial adviser to assist with a further evaluation and review of the group’s investment in Sincere.
Regarding M&C, CDL noted that 2020 has been a difficult year for the hospitality and tourism sector.
In the first half of this year, the group’s hotel operations segment posted a substantial pre-tax loss of S $ 208.2 million, which included S $ 33.9 million of impairment losses in light of the coronavirus pandemic.
M&C, which owns, manages and operates more than 145 hotels around the world, was delisted from the London Stock Exchange in October 2019 after the CDL completed its privatization exercise.
Mr. Kwek Leng Peck owns 43,758 common shares of CDL.
CDL lifted its trading stop at 1.30pm on Wednesday. The stock fell 0.24 Singapore dollars or 3.2% to trade at 7.39 Singapore dollars as of 2:41 p.m.
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