Laguna National Golf objects to winding up application

Lim How Teck has made an application to wind up Laguna National Golf, but on Friday (Apr 29), the company filed an affidavit - signed by the golf and country club's owner Peter Kwee - to object to the application.

Lim, a pioneer club member who made the application for the winding up of the company on Apr 4, has a month to respond. The next hearing has been scheduled for Jun 10.

The Business Times understands that there are clauses in the notes agreement that disallow individual note holders from taking legal action against the company. Laguna's position is that these clauses require legal actions to be taken by the trustees. It has also started fresh action against Lim to seek an anti-suit injunction.

At the heart of the dispute is the millions of dollars that have not yet been paid back to debenture holders, including Lim, even though the 30-year-old notes were due for redemption in June last year. The unredeemed notes amounted to S$70.6 million, according to the club’s 2020 financial statements.

On the day before the notes were to be redeemed, Kwee, who is also the club’s director,  had written to the trustees, stating that the club was unable to fulfil the redemption due to its "current financial position". British and Malayan Trustees Limited gave him until Jul 2, 2021 to settle the payment. 

Aggrieved noteholders noted that while Kwee said Laguna had no money to redeem the debentures, he had enough to revamp the golf course and even built a 200-room hotel, Dusit Thani Laguna, on the club grounds. 

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The 36-hole course, a 10-minute drive from Changi Airport, first opened in 1991. The pioneer batch of 971 members took up a S$120,000 unsecured note on top of paying membership fees, which ranged from S$40,000 (restricted individual) to S$180,000 (open corporate). Debentures are debt financial instruments, but they carry higher risk because they are not backed by any collateral. When it comes to liquidation, debenture holders claim their rights after bondholders.

In the club's prospectus, 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 Jun 11, 2021.

Over the years, there have been various other offers from Laguna to exchange these unsecured notes for new memberships; and that pioneer group of nearly 1,000 original note holders has decreased steadily.

Motoring tycoon Kwee's group Exklusiv bought over Laguna in 2001. In 2016, he transferred Laguna’s  land lease, which expires in 2040, to Laguna Hotel Holdings, another of his companies.

If the court grants the green light for the winding up application, that would allow Lim and his committee to appoint a liquidator, who can scrutinise the club’s books over the past 20 years.

Kwee has previously told BT that the noteholders’ allegations are unfounded.

Last June, 170 members of another club he previously owned - The Pines - won their class-action suit against Exklusiv for downsizing the club and relocating its facilities without informing them. The club was closed for renovation in 2013, and the Stevens Road premises were sold to property developer Oxley Gem for S$318 million.