Club takes Lehman hit
Seletar Country Club seessix years of gains wiped out
conrad raj
editor-at-large [email protected]
THE fallout from the Lehman Brothers structured notes has claimed yet another victim. This time it’s hit the 4,000-member Seletar Country Club, whose investment gains over the last six years have been wiped out by the bad investment.
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“The club’s investments have been impaired by the collapse of Lehman Brothers Bank. At the time of the investment, Lehman Brothers was ranked fourth-largest United States investment bank with an ‘A+’ rating by Standard & Poor’s and a highly-regarded global financial institution,” Seletar’s treasurer Tay Eng Huat said in a letter to members that was seen by Today.
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The :golf and social club in the letter said that it had invested $5 million in an interest rate-linked note issued by Lehman Brothers.
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A creditor’s claim has been filed on its behalf but the outcome is expected to be a long-drawn process. Attempts were made to contact Mr Tay, but he was unavailable for further comment.
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“In exercising prudence, we shall make full $5-million investment impairment in the current financial year. Any subsequent recovery if at all would be a favourable outcome,” Mr Tay said.
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He blamed the decision to broaden the club’s investment portfolio on members’ urgings to enhance the yields of its reserves. “Hitherto, the club had invested its cash reserves in (Singapore dollars) fixed deposits and in property. A decision was made to liberalise its investments, extending to bonds and bank notes when fixed-deposit rates dipped to their lowest levels in 2003.”
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Mr Tay pointed out that over the last six years the club had grossed $5 million in investment income that had “contributed substantially to the club’s yearly surplus”.
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It was also disclosed that the club had realised a capital gain of $775,000 from the sale of a bungalow it owned in Perth.
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Despite the soured investment, Mr Tay claimed the club’s cash reserves were still strong — with $15.5 million in current accounts and another $20.1 million invested in bonds, bond-linked notes and interest rate-linked structured notes.
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“The issuers are all reputable local corporations (like SingTel, Frasers Centrepoint, CapitaLand) and commercial banks (like UOB, HSBC, StanChart) with strong reputation and creditworthiness,” he added.
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Seletar is not the first to suffer losses from its investments and surely will not be the last.
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Seven years ago, the elite Singapore Island Country Club, which has over 10,000 members, dabbled in stocks and suffered losses to the tune of $12.4 million. It led to the club posting its largest ever quarterly deficit of $10 million for July-September 2001.
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More recently then Tanglin Club treasurer Glenn Bryce was taken to task for investing about $10 million of the club’s funds — originally intended to be invested in statutory bonds and earmarked for the special reserve — in OCBC Bank Tier 2 bonds, which have higher yields but, traditionally, higher risk.
Seletar Country Club seessix years of gains wiped out
Seletar Country Club seessix years of gains wiped out
conrad raj
editor-at-large [email protected]
THE fallout from the Lehman Brothers structured notes has claimed yet another victim. This time it’s hit the 4,000-member Seletar Country Club, whose investment gains over the last six years have been wiped out by the bad investment.
.
“The club’s investments have been impaired by the collapse of Lehman Brothers Bank. At the time of the investment, Lehman Brothers was ranked fourth-largest United States investment bank with an ‘A+’ rating by Standard & Poor’s and a highly-regarded global financial institution,” Seletar’s treasurer Tay Eng Huat said in a letter to members that was seen by Today.
.
The :golf and social club in the letter said that it had invested $5 million in an interest rate-linked note issued by Lehman Brothers.
.
A creditor’s claim has been filed on its behalf but the outcome is expected to be a long-drawn process. Attempts were made to contact Mr Tay, but he was unavailable for further comment.
.
“In exercising prudence, we shall make full $5-million investment impairment in the current financial year. Any subsequent recovery if at all would be a favourable outcome,” Mr Tay said.
.
He blamed the decision to broaden the club’s investment portfolio on members’ urgings to enhance the yields of its reserves. “Hitherto, the club had invested its cash reserves in (Singapore dollars) fixed deposits and in property. A decision was made to liberalise its investments, extending to bonds and bank notes when fixed-deposit rates dipped to their lowest levels in 2003.”
.
Mr Tay pointed out that over the last six years the club had grossed $5 million in investment income that had “contributed substantially to the club’s yearly surplus”.
.
It was also disclosed that the club had realised a capital gain of $775,000 from the sale of a bungalow it owned in Perth.
.
Despite the soured investment, Mr Tay claimed the club’s cash reserves were still strong — with $15.5 million in current accounts and another $20.1 million invested in bonds, bond-linked notes and interest rate-linked structured notes.
.
“The issuers are all reputable local corporations (like SingTel, Frasers Centrepoint, CapitaLand) and commercial banks (like UOB, HSBC, StanChart) with strong reputation and creditworthiness,” he added.
.
Seletar is not the first to suffer losses from its investments and surely will not be the last.
.
Seven years ago, the elite Singapore Island Country Club, which has over 10,000 members, dabbled in stocks and suffered losses to the tune of $12.4 million. It led to the club posting its largest ever quarterly deficit of $10 million for July-September 2001.
.
More recently then Tanglin Club treasurer Glenn Bryce was taken to task for investing about $10 million of the club’s funds — originally intended to be invested in statutory bonds and earmarked for the special reserve — in OCBC Bank Tier 2 bonds, which have higher yields but, traditionally, higher risk.
Seletar Country Club seessix years of gains wiped out
