Monday February 4, 2013
Lee: No hidden agenda, decision to terminate and refund in the best interest of CHGS investors
By HANIM ADNAN
KUALA LUMPUR: Property tycoon Tan Sri Lee Kim Yew, the founder of Country Heights Grower Scheme (CHGS) the country's first oil palm farm-sharing investment scheme, has quashed market talk that the recent proposed voluntary termination of CHGS will lead to its management company Plentiful Gold-Class Bhd privatising or profiteering from its oil palm plantation in Gua Musang, Kelantan for personal gains.
He said the decision for the proposed termination of the scheme and the offer to refund investors in full the funds raised was in the best interest of investors in line with the Companies Commission of Malaysia (CCM) guidelines and that of the scheme's trustee.
“I simply want to clear the air. There is no hidden agenda on my part or Bee Garden Holdings Sdn Bhd's, the holding company of Plentiful Gold-Class, to take advantage of the current situation by cheating our investors in CHGS.
“Personally, I have no interest to buy back after CHGS is officially terminated and the plantation land is sold,” Lee who is Plentiful Gold-Class chairman said in an interview at his office recently.
CHGS has become the catalyst for the significant growth in oil palm farm-sharing schemes in Malaysia with six similar schemes registered under CCM over the past five years.
Its business operation and financial model structure in calculating the dividends and annual return for investors or “growers” have been emulated and to a certain extent “improvised” by other oil palm farm-sharing investment scheme promoters to attract more potential investors.
For the past five years, Plentiful Gold-Class has paid out 48% of dividends in total a dividend of 8% in the first three years and 12% in the subsequent years..
“As a pioneer, it is hard for CHGS to bite the bullet and openly say that our scheme is no longer workable. The CHGS plantation is in a dire situation, with very poor fresh fruit bunches (FFB) yield, thus making it difficult for Plentiful Gold-Class, which has no cash, to pay for another net yield dividend to investors by Feb 14,” explained Lee.
Under the CCM guidelines, the scheme was meant to protect investors' interest with minimum risk. Therefore, after the one-time initial fund raising for CHGS scheme whereby 10,000 investors participated with a total fund raised at RM215.5mil, Plentiful Gold-Class is not allowed to charge the land to raise additional funds to support the estate while all the relevant titles are required to be deposited with the trustee company.
Furthermore, the CHGS pioneering financial model is based on the estate yield performance and not on crude palm oil (CPO) prices which is now commonly used by similar schemes introduced after CHGS.
“The mismatch in our financial model has backfired on us. There is a constraint on our part to pay investors without the expected output and FFB yield income coming from our plantation which has partly been damaged by wild elephants, high rainfall, soil fertility situation, shortage of workers and uncompromising terrain,” said Lee.
Lee claimed that many CHGS investors had fully understood the rationale for the scheme's termination and were satisfied with the company's offer for the one-to-one buyback plus the net yield payout from the years 2007 to 2011 of RM78.5mil. He reassured that investors would receive a total of RM294mil compared with the one-time fund raised from investors of RM215.5mil when the scheme was launched in 2007.
“There is only a small group of disgruntled CHGS investors who are creating such a big issue out of the termination exercise and has roped in the Minority Shareholders Watchdog Group (MSWG) to look into the matter and want to delay our intended general meeting on Feb 8 to vote for the termination proposal and accept the refund offer.
“The CHGS management and I have nothing to hide. I understand that MSWG will hold a forum on the CHGS termination issue today (Feb 4) and these disgruntled investors are expected to be there.
“If time permits, I would like to attend the forum and explain explicitly to MSWG and the disgruntled investors on the dilemma CHGS management is facing,” said Lee.
He said there was a misconception among some investors that the Gua Musang estate was worth more than its current value and that Plentiful Gold-Class was in a hurry to privatise it for private gains.
He admitted that it was the intention of CHGS management to put the plantation land for sale via open tender in the market at a reserved price of RM170mil should the proposed voluntary termination be approved by its investors this Friday.
Lee added: “Any shortfall between the final sale price and total buyback amount will be borne by Bee Garden.”
On another grouse about the method of settlement whereby investors would only be getting their total refund in cash within two years upon the approved resolution at the general meeting, Lee said: “I wish to clarify that we will not necessary pay only by the end of the two-year period. If everything runs smoothly we may pay in six months or earlier.”
The company has proposed to pay the first tranche 10% of investors' fee will be paid within 30 days of the approved resolution at the general meeting while the second tranche which is 90% of the investors' fee will be paid either by Plentiful Gold-Class or Bee Garden within two years after the approved resolution.
At the end of the day, the CHGS investors would remain protected, able to retrieve their fee refund safely and perhaps continue to invest in other similar farm-sharing investment schemes in Malaysia which have a more stable financial model compared with CHGS, he added.
Lee hoped that CHGS investors would seriously consider voting for the proposed termination of the scheme and not let Plentiful Gold-Class default.
“If we go into default, the trustee will have to take over the Gua Musang estate and ultimately wind up the scheme and then the management will not be able to manage the outcome anymore,” he added.