SINGAPORE - Laguna National owner Peter Kwee was unable to fulfil his obligations to settle payment owed to hundreds of the golf and country club's debenture holders by the time the deadline set by British and Malayan Trustees lapsed on Friday (July 2).
This comes after Mr Kwee, 74, issued a letter to the trust company on June 10 - a day before the 30-year-old notes were due for redemption - saying that the club was unable to do so "due to our financial position".
The 36-hole course was incorporated in 1991 and its pioneer batch of members took up a $120,000 unsecured note on top of paying membership fees, which ranged from $40,000 (restricted individual) to $180,000 (open corporate).
These debentures went towards the construction of the club, and members were told by the then owners - a consortium including Natsteel and DBS Land subsidiary Resorts International - that the note would be redeemed in full in 30 years' time, on June 11, 2021.
Mr Kwee's Group Exklusiv bought the club in 2001.
Over the years, there have been various other offers from Laguna to exchange these unsecured notes for new memberships to its note holders for unsecured notes.
The latest one came in April, offering debenture holders the opportunity to trade in their notes, in addition to a top-up fee of at least $10,700, to extend their expiring 2021 membership to 2040.
With no resolution to the issue, the pro tem committee for the 120k group that was formed in 2005 said it will be taking legal action against Mr Kwee.
Committee chairman Lim How Teck said it had submitted counter suggestions to Laguna's latest offer, but did not hear back from Mr Kwee.
The 70-year-old, who is the chairman of Temasek unit Heliconia, told The Straits Times: "We all don't want a long, legal battle for nothing. But if we're pushed to the wall and he gives us unfair terms, we have no choice but to fight."
The committee will meet the trustees, liquidators from KordaMentha and their lawyers from WongPartnership next week to discuss the next steps to take.
The group of 971 original note holders has decreased, with 612 note holders as of the club's 2019 financial year, which translates to about $73.4 million in fully redeemed debenture notes.
Mr Kwee, a director of Laguna National, had told The Business Times that there were about 100 members looking to redeem their unsecured notes, although Mr Lim refuted that claim, saying the number was more to the tune of 300.
To ring-fence the club's liabilities, Mr Kwee told BT, he had moved its core business assets to Laguna Hotel Holdings and set up a new company to get financing from banks to build the new hotel and revamp the golf course when he took over the club.
Mr Kwee also told BT that the Laguna National Golf and Country Club's accounts for 2020 now showed $1.5 million in losses and that Laguna Hotel Holdings had just broken even.
He told ST: "When you subscribe to unsecured notes, there are risks - it all lies in the viability of the company at the end of the day. There are certain rules and guidelines to follow.
"The next step for me is to run the club in a professional way to prove that I mean business."