Singapore club Ku De Ta shareholders fight over sales proceeds in LVMH’s $100m takeove ; founder Chris Au allged to divert company’s resources to his other businesses, and alleged non-payment of at least $8.21 million in dividends

Ku De Ta shareholders fight over sales proceeds

Wednesday, Apr 02, 2014

Grace Leong

The Straits Times

SINGAPORE – The ink had barely dried on a $100 million-plus takeover of swish Singapore club Ku De Ta when its shareholders began waging a legal battle over the distribution of proceeds.

L Capital Asia, an investment arm of French luxury group LVMH Moet Hennessy Louis Vuitton, now controls Ku De Ta at Marina Bay Sands SkyPark after buying a 51 per cent stake of the club’s holding company in January.

According to Hong Kong court documents obtained by The Straits Times, a rift has emerged between Ku De Ta chief executive Chris Au and several other shareholders allegedly over his management of the club.

This includes his alleged diversion of its resources to his other businesses, and alleged non-payment of at least $8.21 million in dividends, court papers say.

That, among other things, led shareholders Komal Patel, also known as Karl Patel, Harry Apostolides and Jason Cohen to get an emergency court order on Jan 29 in Hong Kong to freeze up to $16 million of assets belonging to Mr Au and his corporate vehicle, Retribution, which he allegedly controlled via Ms Elsa Ho, court documents said.

Those assets include seven luxury and sports cars. When contacted last Thursday, Mr Au said the allegations against him in relation to the Ku De Ta business were “untrue”.

“I will be bringing counterclaims against those individuals for substantial sums due in relation to the sale to L Capital,” he told The Straits Times.

“In the meantime, I am concentrating on running the business, and on implementing an orderly handover to L Capital’s new management following their recent investment.”

Mr Ravi Thakran, L Capital Asia’s managing partner, said: “Ku De Ta and L Capital have not encountered anything out of the ordinary that would have any impact on Ku De Ta’s business and L Capital’s shareholding. We are still in the process of finalising the CEO position for the group.”

In seeking the freezing order, Mr Patel, Mr Apostolides and Mr Cohen said they wanted to protect proceeds that were to be paid on Jan 29 by L Capital to Retribution’s bank account in Hong Kong, of which the trio were to get a $7.9 million cut.

The application is also an attempt to recover the alleged unpaid dividends.

According to Hong Kong court documents, Mr Apostolides allegedly owns 24.17 per cent of the club.

Mr Patel, in court papers, cited a July 2013 due diligence report from PricewaterhouseCoopers commissioned by L Capital and other documents that looked into the issue of alleged non-payment of dividends.

Ms Ho, the sole shareholder of Retribution, in turn, sought a court order on Feb 5 in Singapore to freeze $21.1 million of assets belonging to Mr Cohen and Mr Yew Kuan Cheong and his corporate vehicle, Essence Investments, which had sold a 27.5 per cent stake in the club to L Capital for $26.1 million.

This was done, Ms Ho said in Singapore court documents, to protect a $21.1 million cut due to her on Feb 4, but which she feared may be dissipated because Mr Cohen and Mr Yew allegedly failed to respond to Mr Au’s repeated requests to confirm they would make the transfer to her.

In addition, Essence was incorporated in Marshall Islands and has no assets in Singapore, except for an OCBC Bank account through which L Capital would transfer the $26.1 million.

“These monies can be easily and quickly removed by Essence,” Ms Ho alleged.

“I believe that these wrongful actions are orchestrated by Karl Patel, and the defendants (Essence, Mr Yew and Mr Cohen) have aligned themselves with him,” she said in court papers.

But Ms Ho’s case has been discontinued as of last month, and she will pursue her claims against Mr Patel, Mr Cohen and Mr Apostolides in Hong Kong courts.