Fourth CDL Director Quits After Singapore Developer Declares $1.4B Loss

A fourth director has resigned from the board of City Developments Ltd (CDL) after the troubled Singapore development titan reported a loss attributable to shareholders of S$1.9 billion ($1.4 billion) in 2020.

Jenny Lim Yin Nee ended her role as CDL’s lead independent director as of 3 May, with the non-executive board member following three other director resignations and one retirement in the wake of the company’s cash-devouring investment in mainland developer Sincere Property Group last year.

In a statement, CDL said: “Having fulfilled the responsibilities in her various roles during her tenure as an Independent Non-Executive Director, Ms Lim is of the view that it is appropriate for her to step down in the light of contributions from the Board’s new Independent Directors.”

The developer led by billionaire Kwek Leng Beng had named four new independent directors to its board since late last year, after the chairman’s cousin and longtime board member Kwek Leng Peck became the first of three directors to leave citing concerns over CDL’s investment in Sincere, which defaulted on a RMB 445 million ($68.7 million) bond on 9 March.

Independent director Tan Poay Seng, now 53, also retired from the board on 30 April, meaning that five among the nine directors who constituted CDL’s board as of 7 October last year have now departed.

Board Reshaped

Now 66, Lim’s resignation was announced on the Monday after CDL’s annual general meeting on Friday, with all resolutions offered at the meeting having passed without controversy. The retired KPMG partner had served on CDL’s board since mid-2018.

In departing the board, Lim also leaves her roles as chair of the audit and risk committee, chair of the remuneration committee, member of the nominating committee and member of the board committee.

Lim’s exit follows just four months after her former KPMG co-worker, Tan Yee Peng, also left her position as an independent director with CDL.

In its annual general meeting on Friday, CDL presented to shareholders that it would have earned a profit after tax and minority interests of S$140 million in 2020, if it had been able to exclude its investment in Sincere, a Chongqing-based developer specialising in business parks.

Vowing that it had “ring-fenced” its commitment to Sincere to prevent further losses, CDL earlier this year declared an S$1.8 billion write-down on the mainland builder. The company also suffered impairment losses on hotel and investment properties during 2020.

Director Exodus

In announcing his departure from CDL’s board in October last year, Kwek Leng Peck had said directly that he disagreed with the company’s investment in Sincere and its ongoing provision of financial support to the distressed developer.

Kwek Leng Peck is the uncle of CDL CEO Sherman Kwek, the son of the company chairman, who has been directly involved in its China operations since taking on the role of chairman of CDL China Ltd in 2016.

Independent non-executive director Koh Thiam Hock left the CDL board on 29 December. “Having shared his observations, concerns and suggestions on the group’s investment in Sincere Property Group with all members of the board, Mr Koh is of the view that it is most appropriate for him to now step down as a director,” CDL said in a filing at the time.

Tan Yee Peng’s departure was announced on 4 January, having taken effect on 30 December, with the finance professional having disagreed with the board over the handling of the Sincere investment after the acquisition.

Debt Feud

After its latest bond default in March, Sincere had issued a statement complaining that a delay in decision-making by “the controlling shareholder” — apparently meaning CDL — had “seriously affected the timely implementation of financing and asset disposal to improve company operations and cash flow”.

CDL responded in a statement to the Singapore exchange on 11 March: “Sincere Property has mis-represented the circumstances, the actions surrounding the investment, the relationship between both parties and CDL’s efforts to engage the JV partners to deal proactively with the challenging operating environment.”

As of 30 June 2020, Sincere had debts of RMB 37.36 billion, with RMB 16.6 billion classified as short-term liabilities. At the same time it had cash on hand of RMB 2.6 billion.

Throughout this year, the developer has five sets of bonds reaching maturity totalling over RMB 3 billion.

CDL’s RMB 4.39 billion investment in Sincere in April last year gave it a 51 percent stake in the company, without giving it board control. The Singapore firm said in its statement on 11 March that it takes a serious view of Sincere’s comments regarding CDL being responsible for credit woes and noted that it would “take all necessary steps, including legal actions, to ensure corporate transparency and good governance”.