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CDL director Kwek Leng Peck quits due to disagreements with board, management
CITY Developments Limited (CDL) non-executive and non-independent director Kwek Leng Peck left the property giant on Monday, citing the management of its British hotel arm and the investment in a Chinese firm.
Mr Kwek, 64, stepped down after more than three decades in the role.
He stated in his letter of resignation that he disagreed with the board and management in relation to the group's investment in Chinese real estate firm Sincere Property Group as well as its continuing provision of financial support to Sincere.
He also had reservations with the group's approach in managing London-based wholly-owned subsidiary Millennium & Copthorne Hotels (M&C).
Mr Kwek quit as a director of M&C as well, concurrent with his resignation from the parent company.
He is the cousin of CDL executive chairman Kwek Leng Beng and the uncle of CDL's group chief executive and executive director Sherman Kwek.
Mr Kwek Leng Peck is also a director of CDL's substantial shareholders Hong Realty (Private) Limited, Hong Leong Holdings Limited and Hong Leong Investment Holdings Pte Ltd. Including these three companies, he held directorships in about 80 entities as at Monday.
In a bourse filing on Wednesday, CDL noted that its investments into Sincere totalled about S$1.9 billion.
These include a 51 per cent joint-venture equity investment in the latter amounting to 4.4 billion yuan (S$896.8 million). It had also subscribed for US$230 million worth of bonds issued by Sincere, and provided a working capital loan of 650 million yuan.
The investments also include a 1.5 billion yuan liquidity-support undertaking provided by CDL for Sincere's bonds maturing on Oct 26, 2020, as well as a 1.5 billion yuan corporate guarantee in relation to an external bank loan obtained by Sincere.
"The liquidity position at Sincere is challenging, being severely impacted by the Covid-19 pandemic and the property cooling measures which caused the further tightening of liquidity for real estate companies in China," CDL said.
As a result, the asset divestment plan for some of Sincere's retail, hospitality, office and business park assets is now expected to take place over a longer period, it added.
The plan is meant to lighten Sincere's debt load on investment properties exposure and to shore up its residential development plans to transform its platform.
CDL on Wednesday said it is in the process of identifying and appointing an external financial adviser to assist with further evaluation and review of the group's investment in Sincere.
As for 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 recorded a substantial pre-tax loss of S$208.2 million, which included S$33.9 million of impairment losses in view of the coronavirus pandemic.
M&C, which owns, manages and operates over 145 hotels globally, was delisted from the London bourse in October 2019 after CDL completed its privatisation exercise.
Mr Kwek Leng Peck holds 43,758 ordinary shares of CDL.
CDL lifted its trading halt at 1.30pm on Wednesday. The stock fell S$0.24 or 3.2 per cent to trade at S$7.39 as at 2.41pm.