This article first appeared in The Edge Malaysia Weekly on May 20, 2024 - May 26, 2024

A dispute is understood to be brewing between two of the heirs of the late gaming billionaire Tan Sri Dr Chen Lip Keong at his Hong Kong-listed flagship NagaCorp Ltd, which operates NagaWorld, a casino in Phnom Penh, Cambodia.

Lip Keong, who died in December last year at the age of 75, had controlled 69.26% of NagaCorp via The Sakai Trust, which, other than a direct 44.76% shareholding, also held an indirect stake of 24.5% via ChenLipKeong Capital Ltd, Lipkco Group Ltd and Lipkco Enterprises Ltd.

The business tycoon was one of Malaysia’s wealthiest men. Indeed, NagaCorp’s market capitalisation stood at US$2.53 billion (RM11.85 billion) last Friday. Lip Keong had also owned several assets in the country.

His two heirs who are at loggerheads — Chen Yiy Fon, 43, and Chen Cherchi, 36 — are half-brothers. The former is the second son of Puan Sri Lee Chou Sarn and the latter is from another marriage.

All in, Lip Keong had five sons — three with Lee (Yiy Fon, Yiy Hwan and Yipern); and Cherchi and Cien Then with his second wife.

According to sources, his only daughter, Cherjeen, 35, received a partial allocation of assets from Lip Keong and is not involved in the dispute.

All five brothers are beneficiaries and directors of The Sakai Trust.

Despite the simmering feud, the siblings are said to be close and it is understood that there are parties working to diffuse the situation.

“There are hidden hands trying to muddle the situation,” says a source close to the family.

In an announcement to the Hong Kong Stock Exchange last Thursday, NagaCorp said the employment of Cherchi as CEO — finance and treasury had been terminated with immediate effect.

The announcement said: “The board of directors of NagaCorp periodically reviews the composition of and the delegated function and work tasks to the senior management of the group from time to time, in order to streamline the internal corporate governance and management structure to efficiently and effectively continue the group’s business operations and adhere to the business strategies laid down by the board. The board announces that Chen Cherchi will no longer serve as CEO — finance and treasury of the company with effect from May 16, 2024.

“To the best [of the company’s knowledge], apart from possible disagreement over the termination of his employment by the board, Chen Cherchi has no other disagreement with the board, and there is no other matter which needs to be brought to the attention of the shareholders of the company.”

NagaCorp holds a casino licence that is valid until 2065 and is guaranteed to be the sole casino operator in Cambodia until 2035.

Yiy Fon was re-designated executive director and CEO of NagaCorp from December 2023, assuming the leadership of the company after Lip Keong’s death. Yiy Fon was NagaCorp’s CEO — operations from April 2022. After Lip Keong died, Yiy Fon was given an 8.3% stake in NagaCorp while the four other sons each inherited 6.6% equity interest in NagaCorp.

According to a source familiar with the company, NagaCorp chief financial officer Anthony Cheung King Man will take over the finance portfolio that Cherchi had controlled until recently.

A source familiar with the matter says Lip Keong’s intention was for his sons to run the company collectively. Others say, however, that Lip Keong was an intelligent man. Knowing, perhaps, that his sons would clash once he passed on, he may have envisioned their having issues working together and made some other plan that has yet to crystallise.

In 2022, an ailing Lip Keong re-designated him self as senior CEO and oversaw the day-to-day operations of NagaCorp. Yiy Fon and Cherchi were given the roles of CEO — operations and CEO — finance and treasury respectively. Of the other sons, Yiy Hwuan was made CEO of hotels; Yepern was made head of the environ mental, social and governance activities of NagaCorp; and Cien Then given quite a prominent role at some of Lip Keong’s other key assets.

Interestingly, this change at the helm of the finance portfolio comes at a time when NagaCorp has US$472.2 million in bonds maturing in July this year. As at end-December 2023, NagaCorp’s cash and deposits stood at US$367.6 million. In October 2023, NagaCorp entered into a loan agreement with shareholder ChenLipKeong Capital, controlled by The Sakai Trust, to provide a loan of up to US$80 million at 8% interest a year to help with the refinancing or discharging of the outstanding US$472.2 million in bonds.

In its financial year ended Dec 31, FY2023, NagaCorp posted a net profit of US$177.73 million on the back of gross gaming revenue of US$514.80 million. In FY2022, NagaCorp registered a net profit of US$107.25 million from US$445.88 million in gross gaming revenue.

NagaCorp has plans for a US$3.5 billion expansion project, dubbed Naga 3 — the third phase of development — and slated for completion in September 2029. This will increase its capacity by 100% to 5,000 hotel rooms, 1,300 gaming tables and 4,500 electronic gaming machines.

At the present time, Lip Keong’s only publicly traded company in Malaysia is FACB Industries Inc Bhd (KL:FACBIND), which is involved in mattress and bedding technology, under the Dreamland banner. 

Yiy Fon is chairman of the company and his mother is a 30.16% shareholder.

At its close of RM1.24 last Friday, FACB had a market capitalisation of RM104 million. In its six months ended Dec 31, FY2023, it made RM2.74 million in net profit from RM24.73 million in sales.

Lip Keong had privatised Petaling Tin Bhd in mid-2018 after acquiring 24.28 million shares, or a 7.02% stake, for RM9.71 million, or 40 sen a share, which raised his shareholding to just above 90%.

Lip Keong then made an unconditional voluntary takeover offer to acquire the remaining 34.58 million shares, or almost 10% equity interest, in Petaling Tin at 40 sen, or for RM13.83 million. This was the second attempt to take Petaling Tin private within two years.

In April 2016, Lip Keong had offered to buy out the remaining 35% of shares in Petaling Tin not owned by him at 24 sen apiece, but the plan fell through after independent advisers deemed the offer “not fair”, albeit “reasonable”, and advised minorities to reject the offer.

A check on the Companies Commission of Malaysia (SSM) website shows that Yiy Fon and Cien Then are directors of Petaling Tin and the company is wholly-owned by RFund Private Trust Co Pte Ltd.

In its financial year ended March 31, FY2023, Petaling Tin suffered an after-tax loss of RM15.87 million from RM1.15 billion in revenue. During the period in review, the company had total assets of RM353.98 million and total liabilities of RM51.25 million. It had accumulated losses of RM82.94 million after five consecutive years of bleeding.

Another of Lip Keong’s larger companies — Karambunai — was privatised in September 2019 after Lip Keong, who controlled 73.41% of the company, offered to buy the 26.59% he did not already own at 11 sen a share, and offered three sen apiece for the remaining 523.5 million warrants, representing 51.57% of the outstanding warrants he did not hold, in a deal valued at an estimated RM184.67 million.

Resort operator Karambunai is 93.92%-controlled by Lipkco Ltd and 6.08% by FACB. Its directors are Yiy Fon and Cien Then, similar to Petaling Tin’s.

In its financial year ended March 31, FY2023, Karambunai suffered an after-tax loss of RM14.27 million on the back of RM28.92 million in revenue. The company suffered after-tax losses for four straight financial years. As at end-March 2023, Karambunai had total assets of RM1.29 billion and total liabilities of RM38.15 million.

Lip Keong, who was a trained medical doctor, commenced his casino operations on a barge on the Bassac River near Phnom Penh in 1995, and managed to obtain a casino licence from the Cambodian government. He opened NagaWorld in 2003 and floated its shares in 2006.

In 2017, he successfully expanded his operations with Naga 2, which cost US$700 million. Will his hopes for Naga 3 be fulfilled or will the family feud scuttle his well-laid plans? 

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