SERI KEMBANGAN, 22 June: The Inland Revenue Board (IRB) has yet to confirm whether the seizure of Country Heights Holdings Bhd executive chairman and major shareholder Tan Sri Lee Kim Yew’s fixed deposits of some RM126 million placed in a foreign-owned bank is related to the tax liability incurred by its subsidiary.
Speaking to reporters after the group’s AGM here yesterday, its independent non-executive director Nik Hassan Nik Mohd Amin said at the moment the group’s tax consultant and lawyers are still in discussion with IRB to resolve the tax liability issue.
Asked on the reasons the group agreed to pay back the tax liability amount to Lee despite the absence of confirmation from the IRB, he responded by saying that the tax liability is only a small issue for the group, as it owns assets worth more than RM2 billion currently.
“We are aware of this issue. But to me this is not a big matter for us. In fact, we are still getting strong support from our shareholders. This has proved that the shareholders are not disturbed by this (tax) issue,” he added.
The group has been making losses since 2015. For the first quarter ended March 31, 2017, the group’s net losses widened to RM7.85 million on lower revenue of RM18.71 million.
Kim Yew previously notified the group that he believed the action taken was in relation to RM22.7 million worth of tax liabilities incurred by its wholly owned unit and major subsidiary, Country Heights Sdn Bhd (CHSB), which were accrued from the years of assessment of 1997 and 1998.
Kim Yew then said he was agreeable to allow his seized fixed deposits to be used to settle the tax liabilities, provided that the company pay back the amount with no interest, which was agreed to by the board. He did not attend yesterday’s AGM, citing business overseas. His daughter Lee Cheng Wen, who is also deputy chairman of Country Heights Holdings, read out his three-page emotional message to shareholders.
In it, Kim Yew told the story of a pregnant deer going into labour in the midst of many dangers, appearing to allude to the group’s own predicament and its focus on getting itself out of losses in the midst of its issues with the authorities.
He asked shareholders to brainstorm with members of the board on corporate recovery strategies and the future business of the group. He also said the group will recalibrate its focus on property development and spin off the rest of the non-core businesses as associated activities.
Kim Yew said the group now has total bank borrowings of RM122 million and no other tax arrears matters once the outstanding RM22.7 million tax liability incurred by CHSB is settled.
Furthermore, Country Heights Holdings executive director Michele Lee said the group’s strategic business plan to accelerate corporate recovery will involve strategic partnerships and possible disposal of certain inventories and landbanks not deemed to be core to the future of the group.
The proposed recovery strategy is intended to help the group restore financial health by reallocating and optimising resources for core businesses. Proceeds generated from the recovery will be used to reduce bank borrowings and provide immediate cash flow and funding for existing and future projects.
The group has consolidated net assets of more than RM797 million and a combined landbank of 6,106 acres with a net book value of about RM1.2 billion (before taking into account any revaluation), it added.
A shareholder who attended the AGM and brainstorming session yesterday, speaking on condition of anonymity, told SunBiz that the group’s subsidiary tax liability issue is not a big concern to the shareholders but its losses are.
“Just (questions) on the losses of the company (were raised by the shareholders) and they promised to do better, at least in three years’ time,” she said.
Another shareholder, who also declined to be named, told SunBiz he is confident that the group will resolve the tax issue and believes that the group’s consultants and lawyers will handle it accordingly.
The brainstorming session, which lasted about one hour, was attended by the group’s board of directors and shareholders.
— THE SUN