Simon Cheong In Spat Over Aussie Board Make-Up

Source : The Straits Times, Aug 28, 2007

PROPERTY developer Simon Cheong is engaged in a war of words with investment group Guinness Peat Group (Australia) (GPG) over board membership.

Mr Cheong, chairman and chief executive of SC Global Developments, is also chairman of Australian developer AVJennings, the company at the centre of the dispute Down Under.

Yesterday, he wrote to AVJennings shareholders to rebut recent comments by investment company GPG on the company's prospects.

Last month, GPG, which has an 11.1 per cent stake in AVJennings, requested a general meeting to propose the election of its two board nominees - Mr Graeme Cureton and Mr Jason Ters.

AVJennings set the meeting for Sept 14 and recommended that investors reject GPG's nominees as they would create a conflict of interest.

GPG, it noted, held a majority stake in a rival home builder, Canberra Investment Corp.

GPG responded by writing to AVJennings shareholders on Aug 17, saying that its nominees were 'outstanding people'. Among other things, it also pointed out that AVJennings had reduced dividend payout both this year and last year.

Mr Cheong replied yesterday, saying that GPG 'has provided nothing' to support its contention that its nominees should be elected. He also noted that GPG's share price has dropped by about 15 per cent over the last year, when Australia's All-Ordinaries Index had risen by around 20 per cent.

He also addressed the issue of reduced dividend payouts, saying that the cyclical nature of the property industry had an impact on the company's results.

AVJennings investors, he said, had been told that earnings in these years had been affected by a general downturn in residential building in the eastern Australian states, particularly New South Wales.

Mr Cheong further pointed out that rival company Canberra Investment reported a 46 per cent drop in revenue and a 78 per cent decline in net profit last year.

He said AVJennings will continue to focus on strategies to deliver long-term results and urged shareholders to back its directors.