Group Lease downshifting in Cambodia, Indonesia
SET-listed Group Lease Plc (GL) will shift its focus to Thailand and Myanmar as Cambodian and Indonesian operations are downsized because of unresolved conflicts with J Trust Asia Pte Ltd (JTA), GL’s former partner and major creditor for more than two years.
The company’s plan to downsize operations in Indonesia stems from conflicts with JTA, which previously provided loans for GL’s leasing projects, said chief executive Tatsuya Konoshita.
GL plans to shift its focus to microfinance and motorcycle leasing in Myanmar, where there is high growth potential for the latter, Mr Konoshita said.
The company will also focus on the Thai market, as its core business units are located in the country, he said, adding that the country still has further room for growth and domestic business is quite stable.
“We expect some growth in Thailand because of improvements in loan quality, but we are being conservative about our lending and are not focused solely on growing the Thai portfolio,” Mr Konoshita said. “Indonesia provides us with potential growth similar to Myanmar in the way of microfinancing, but in the near future we will maintain limited growth [in Indonesia] as we wait to see how the currency stabilises and a longer [assessment] period of microfinance performance.”
Regarding the legal issue with JTA, there are currently six cases under court procedures, of which four cases were filed by JTA and two by GL.
“We are confident that GL will win the cases filed by JTA because the Civil Court has already dismissed one case and JTA has resubmitted the case to the Appeal Court, which could be dismissed,” Mr Konoshita said.
Earlier, JTA initiated legal proceedings against Group Lease Holdings Pte Ltd (GLH), GL’s wholly owned subsidiary registered in Singapore, and other companies, based on the allegation that GLH and other defendants had defrauded JTA of investment in GL worth US$180 million (5.8 billion baht).
JTA filed a business rehabilitation petition against GL in order to take over the company and become a major shareholder by debt-to-equity conversion, Mr Konoshita said.
JTA’s plan failed after the Central Bankruptcy Court dropped the petition.
JTA’s holding of GL’s convertible debentures stands at $180 million, which is divided into two series.
GL has also reissued its 2017 financial statements and sent a letter to notify the Securities and Exchange Commission, Mr Konoshita said.
Setting up loan-loss reserves in last year’s third quarter resulted in unchanged shareholders’ equity and improved net revenue, he said, adding that the company is willing to work with the SEC and related agencies to ensure good corporate governance.
On Oct 16, the SEC filed a criminal complaint against Mr Konoshita’s brother, former GL chief executive Mitsuji Konoshita, with the Department of Special Investigation, alleging fraud, misappropriation of company assets and falsification of accounting records by executing concealed transactions through several associated firms abroad to exaggerate operating results.
The regulator pointed to evidence that GLH had issued loans to four registered firms in Cyprus and another in Singapore worth $54 million, with Mr Konoshita serving as the controller and ultimate benefactor.