A longstanding director of City Developments (CDL) has abruptly quit after clashing with the property giant's board and management.
Mr Kwek Leng Peck, the cousin of billionaire CDL executive chairman Kwek Leng Beng and uncle of group chief executive Sherman Kwek, has served on the board for more than 30 years.
CDL announced that Mr Kwek Leng Peck gave notice of his resignation with effect from Oct 19.
Mr Kwek Leng Peck, 64, cited "disagreements with the board and management in relation to the group's investment in Sincere Property Group and its continuing provision of financial support to Sincere" in a letter mentioned by CDL in its Singapore Exchange filing yesterday.
He had also noted his reservations with CDL's approach in managing Millennium & Copthorne Hotels (M&C).
M&C is a wholly owned unit of CDL that owns, manages and operates more than 145 hotels globally. It listed in London in 1996 and was delisted last October after a privatisation exercise by CDL.
Mr Kwek Leng Peck could not be reached for further comment yesterday.
CDL said in yesterday's announcement that its total investment in Sincere, a Chinese developer, included a 51 per cent joint venture holding of 4.4 billion yuan (S$897 million), a US$230 million (S$311.5 million) subscription of bonds issued by Sincere and a working capital loan of 650 million yuan.
In addition, CDL provided a liquidity support undertaking totalling 1.5 billion yuan relating to bonds issued by Sincere that mature next Monday and a 1.5 billion yuan corporate guarantee in relation to an external bank loan obtained by Sincere. These investments total $1.9 billion, CDL said.
"The liquidity position at Sincere is challenging, being severely impacted by the Covid-19 pandemic and property cooling measures which caused further tightening of liquidity for real estate companies in China, the most recent being China's three red lines," CDL said.
These red lines refer to thresholds on debt that developers must meet if they want to refinance.
"The intended asset divestment plan for some of Sincere's retail, hospitality, office and business parks assets to lighten its debt load on investment properties exposure... and to shore up its residential development plans... is now expected to take longer due to the current climate," CDL said.
The board said it is appointing an external financial adviser to help review its Sincere investment and its impact on the group.
"(This year) has been a difficult year for the hospitality and tourism sector. In the first half of this year, the group's hotel segment recorded a substantial pre-tax loss of $208.2 million, which included $33.9 million of impairment losses made in view of the pandemic," CDL said.
Mr Sherman Kwek told a virtual briefing in August that after the M&C privatisation and the investment in Sincere, CDL was not looking to make any "big, substantial game-changing acquisitions" at the moment, saying that "we need to conserve cash and ensure that we can ride out the pandemic".
Mr Kwek Leng Peck also sits on the boards of 81 other companies. These include Hong Realty (Private), Hong Leong Holdings and Hong Leong Investment Holdings, which are all substantial shareholders in CDL.
CDL shares closed down 55 cents, or 7.2 per cent, to $7.08 yesterday after resuming trading at around 1.30pm. The company had requested a trading halt before the stock market opened yesterday.
