Kwek Leng Peck, cousin of City Developments' executive chairman Kwek Leng Beng, has “regrettably” resigned from the board of the property giant.
Leng Peck, according to his letter of resignation cited by CDL, disagreed with CDL’s investment in Sincere Property Group, including the continuing of financial support totalling $1.9 billion to the China-based developer.
See: City Dev to acquire 51.01% joint controlling interest in China’s Sincere Property Group for $0.88 bil
In addition, Leng Peck has “reservations” with CDL’s approach in the management of its hospitality unit, Millennium & Copthorne Hotels.
Earlier this year, CDL took a 51% stake in Sincere for RMB4.4 billion. It has also subscribed for US$230 million worth of bonds and provided a working capital loan of RMB650 million.
CDL has also provided a liquidity support undertaking totalling RMB 1.5 billion relating to the bonds issued by Sincere that’s maturing on Oct 26. It is also putting up a RMB1.5 billion corporate guarantee to loans taken out by Sincere.
According to CDL in an SGX announcement, no thanks to Covid-19, the liquidity position at Sincere is challenging, which has added further pressure on top of property cooling measures in China.
“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 as a key strategy to transform this platform, is now expected to take place over a longer period of time due to the current climate,” adds CDL.
CDL is going to appoint an external financial advisor to help evaluate and review its investment in Sincere.
“The impact on the group or its financial reporting will be prepared and calibrated together with the external financial advisor,” the company says.
As at 2.20pm, CDL shares are down 25 cents, or 3.28%, to trade at $7.38.