(In Statutory Management)
Report to Equiticorp Holdings Ltd debenture stockholders
Dated 21 June 2017
At the time of our last letter, the liquidator of City Centre Sdn Bhd ("CCSB") was engaged in post-tender discussions with several parties over the block of land owned by CCSB in downtown Kuala Lumpur. None of these turned into concrete offers for the property.
The liquidator and his appointed Malaysian real estate agent continued to market the property locally and throughout the Asian region. The commercial property market in Malaysia has been weakening over the past year or two, so the liquidator was reluctant to put the property to auction or call for another tender.
After lengthy negotiations with one party, the liquidator finally signed a conditional sale agreement in mid May 2017. The conditions relate to Government and Central Bank approvals for overseas ownership and financing, as the purchaser is from outside Malaysia. The liquidator of CCSB has requested that all other details of the agreement remain confidential until such time as the contract becomes unconditional and is settled, due to commercial sensitivities.
We are pleased with this progress and hope that the agreement will be concluded in due course. However, we do not want to raise the hopes of our debenture holders. The creditors of CCSB will have to be paid out by the liquidator, and then there is a dispute to resolve concerning a Singaporean bank which is owed money by CCSB's parent company. The disputed debt is allegedly secured by a charge over the parent company's shareholding in CCSB. This may have to go to court to be resolved.
After that matter is resolved, the parent company will be liquidated and whatever funds remain will be distributed to its shareholders. Mr Cheah's 82% shareholding is under the control of the Singapore Official Assignee, as Mr Cheah was a resident of Singapore at the time we bankrupted him. We are the largest known creditor in the bankrupt estate, but the Official Assignee will not call for, and adjudicate upon, claims in the bankruptcy until such time as there are funds to distribute.
Given all the circumstances above, we do not wish to speculate on what possible recovery might ultimately be made by Equiticorp, or the timing thereof.
In our last letter, we also referred to allegations that Mr Cheah's brother and 2 lawyers had dishonestly taken receipt of a sum of 10 million Malaysian ringgits (approx. NZ$3.2 million) from a scheme of arrangement to sell CCSB's property directly to a Chinese buyer. Mr Cheah's brother was charged in late 2016 with abetting a criminal breach of trust. He appeared in court for arraignment and was released on bail. On 7 June, the case against him began. The court had allocated a one day hearing, which was insufficient to complete the trial, so it has been adjourned until 16 October for 2 further days.
2. Next report
We will write again in 12 months time, around 30 June 2018, or sooner should there be positive developments.
B G Stowell
Statutory Manager
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