Sharon Tan testifies that CHC board members were aware of pertinent points regarding Xtron’s purchase of the Riverwalk property, and that she had a clear frame of mind with regards to the genuineness and legitimacy of earlier plans for the church to buy Riverwalk.
As far as City Harvest finance director Sharon Tan was concerned, the proposal for CHC to purchase the Riverwalk property would “make a lot of sense” as the church would realize significant rental savings amounting to over $1m a year.
Sharon Tan was responding to her lawyer senior counsel Kannan Ramesh’s question about the legitimacy and commercial logic of the proposal.
This afternoon, the court heard that in May 2008, an opportunity arose for the church to purchase the Riverwalk unit, which CHC was already renting at the time.
Sharon Tan’s role was to perform a “detailed analysis” of this opportunity, after which she concluded that there would be significant savings if the church acquired the property instead of continuing to rent it.
The proposal to purchase Riverwalk was then brought up to CHC’s board members, but was shelved after several members said that the purchase price of $21m was unsuitable, and that the church should wait for the price to go down before reconsidering the proposal.
Kannan’s line of questioning this afternoon established Sharon Tan’s frame of mind about the Riverwalk acquisition being genuinely a good investment by the church.
The plan to buy Riverwalk resurfaced in July 2008, when Serina Wee, Tan Ye Peng and Chew Eng Han and others, discussed solutions to resolve Xtron’s cash flow problems which were caused by delays in the launch of the US music album.
Through email evidence, the court saw that Chew had proposed for Xtron to buy Riverwalk instead of the church, at a now lower price of $17.8m, and for Xtron to lease it back to the church.
As part of this plan, the church would pay Xtron advanced rental fees for seven years. With this upfront sum of money, Xtron would be able to make a down payment on the property while obtaining working capital to address its cash flow problem.
Kannan pointed out that his client was not in the loop with regards to Xtron’s cash flow deficit, nor was she involved in discussions to bring in more funding.
Subsequently, Sharon Tan was asked to bring up the plan to buy Riverwalk at a board meeting on Jul 19, 2008. However, as she had not been included in the emails about Xtron’s cash flow issues, she drafted the agenda for the meeting based on the impression that the church was to buy Riverwalk.
As the meeting unfolded, the board members came to a consensus for Xtron—not the church—to purchase Riverwalk, and for a bank loan to be taken to help finance the purchase.
Sharon Tan testified that the board also knew of plans for Xtron to receive advanced rental payments from the church.
In addition, the board members were told of the option for CHC to purchase Riverwalk at the original price ($17.8m) within seven years, to safeguard the church’s interests.
Ramesh was seeking to show that despite the fact Sharon Tan was not involved in earlier discussions to resolve Xtron’s cashflow problems through Riverwalk, she, along with the board members, were brought up to speed with this new proposal for Xtron to buy Riverwalk. She had later included the corresponding amendments for her preparation of the meeting minutes.
Court resumes next Monday at 9.30am.