Two investors in a legal spat with businessman Andy Ong have won a court order to place nearly half of the $203 million sale proceeds of Singapore's Big Hotel in trust or "escrow".
The order bars the hotel's holding company, ERC Unicampus, and its directors including Mr Ong, from disposing of the $100 million in escrow. It is pending the outcome of a court hearing on Thursday to decide if the money should stay in escrow until the shareholders agree on how to divvy up the funds.
But the order allows for the payment of conveyancing costs and taxes related to the sale. These include bank loans of more than $80 million and trade bills.
The order was obtained on Tuesday - the day the sale of the 308-room Middle Road property to Hong Kong private equity group Gaw Capital Partners was completed. The investors - Mr Ho Shun Yau, 67, and Mr Yap Chew Loong, 62 - cited risks that the proceeds could be disposed of before the court hearing.
Mr Yap, in court papers, said there were indications that ERC Holdings, a private investment company founded by Mr Ong, intends to apply the proceeds to its investments overseas, including a hotel in Vietnam, which would make it "extremely difficult, if not impossible, to recover these proceeds retroactively".
But Mr Ong, a former director of Sakae Holdings, said that there is "no real risk" that the sale proceeds will be mismanaged.
He said in court papers that ERC Unicampus has "every intention" of presenting the manner of profit distribution to the shareholders. He added that the strategy for distribution of proceeds will be presented at an extraordinary general meeting on Monday and Tuesday.
The two investors are among about 200 people who invested more than $35 million in the 16-storey hotel around five years ago.
Mr Ho and Mr Yap put their money in special purpose vehicles - called ERC Prime and ERC Prime II. These, in turn, hold stakes in ERC Unicampus, which owns the hotel.
The two investors said that the audited financial statements of ERC Unicampus have been released in a "tardy fashion" for some years, making them concerned about the manner in which the sale proceeds will be distributed.
Mr Ho said in court papers that Mr Ong had told investors that "all profits from the purchase and redevelopment of Big Hotel would be distributed equally back to the shareholders as dividends".
Ms Koh Swee Yen, a partner of WongPartnership, is representing Mr Ho and Mr Yap, while Mr Ong's lawyer is Mr Vikram Nair, a partner at Rajah & Tann.
