CCC : Calvary Church Begins Loan Drawdown

Senior Pastor Prince Guneratnam (PG) must be going through dreaded times.

The road to fulfilling his vision of building a mammoth monument (Calvary Convention Centre or CCC) to glorify God has certainly not been easy. 

Although one may argue that it is never easy when one does the will of God, the same also holds true when man’s vision gets clouded with God’s vision and man believes his vision is God’s vision. 

However one looks at it, the road that PG has taken surely looks like one that will lead Calvary Church into many years of financial bondage, beginning with this latest drawdown of the Bank Loan.

Does God need to borrow money from man’s banks to fulfill His vision? 

Our Bible declares that God is the Creator of the heavens and the earth and He owns the “cattle on a thousand hills” (Psalm 50:10). Our God is a mighty rich God and He has no problems fulfilling His vision. 

Alas, for PG, he has to resort to Bank borrowings to fulfill his vision. The money is just not coming in as he had hoped for, as members become numbed to his incessant barrage of “give, give, give” from the pulpit and the constant insinuation that God will not bless if they do not give. This “spiritual threat”, is of course, unbiblical. God blesses because he is a good God, not on the basis of our giving as we cannot “earn” His blessings.

Hence, PG has no choice but to draw down on the Loans granted by Alliance Bank and Public Bank. 

Last Sunday, the Church announced that they have drawn down RM14 million to pay the Contractors and the Interest Payable on the Loan Amount drawn down comes up to RM70,000 a month.

What does the future hold for Calvary Church from now on?

When the total loans of RM43 million from both Banks are fully drawn down, the Interest will amount to RM215,000 per month or RM2.58 million per year.

This does not even take into account the Principal payment. If the RM43 million loans are to be repaid over, 10 years, it will come up to another RM358,000 per month or RM4.3 million per year.

The combined interest and principal payment will eventually be a whopping RM573,000 per month or RM6.88 million per year for 10 years! 

This is just mind-blowing and poses a huge question mark over the Church’s ability to repay the Banks and the future fate of Calvary Church, considering that the income surplus for 2010 was only RM6.1 million. The cost of maintaining the CCC is not even taken into account.

Will the construction of CCC be completed with the full drawdown of the Loan sum of RM43 million?

The answer is NO. Even with full loan drawdown, the Church is still short of RM75 million to complete Phase 1 of CCC. The Exsim land deal is supposed to generate a cash inflow of RM55 million to the Church but this is spread out over at least 4 years. 

Therefore, in the interim, PG will have to raise between another RM55 to RM65 million, assuming Exsim will pay between RM10-20 million upfront on the deal.

PG certainly needs a giant panadol!

Footnote: CT has amended the loan repayment figures in the above article, following verification that the loan period is only 10 years. The original article had assumed a loan period of 15 years.

Calvary-Exsim deal becomes riskier

At the recently convened Calvary Church EGM on 16 Dec 2011, the Board of Deacons sought the approval of the members to vary the terms of the Calvary Church-Exsim Development Sdn Bhd joint venture on the commercial plot of land adjoining the Calvary Convention Centre (CCC) project.

The variation sought was to allow the title and ownership of the land to be transferred to Exsim upon the receipt of the amount of RM20 million, out of the total agreed purchase price of RM55 million. The variation was approved by the members.


Under the previously approved terms, the title to the land was to be transferred to Exsim only after the receipt of the full sum of RM55 million. However, this situation is not desirable as it would mean that Calvary Church, as land owner, will be a party to every sale and purchase agreement that will be signed in respect of the apartments sold. This, in turn, will result in severe tax implications as highlighted in our previous article on this issue.

(Read Calvary Enters JV with Property Developer dated 22 October 2011.)


One of CT’s readers had sent the article to all the deacons and pastors of Calvary Church, and having taken note of the concerns raised by CT, the Deacons have now come up with the above variation in the terms.


Whether this new revised Agreement will enable the church to avoid Income Tax on the Church’s share of profits from the Development, is too early to tell. Such a risk remains, so does the questions of ethics. Jesus did say that we ought to “give to Caesar what belongs to Caesar” when He was asked if one should pay taxes.


Aside from the issue of tax, the new revised terms, raises a new risk. Previously, the title was to be transferred to Exsim only after the full sum of RM55 million is received. If the Development project is successful, Exsim will have to pay the Church in full in order to secure the title to the land and to enable them to sub-divide and transfer the strata titles to the apartment purchasers.


Now, if the title is transferred to Exsim after they pay only RM20 million, Exsim is no longer under any pressure to pay up the balance RM35 million.

Exsim may have promised to pay the RM35 million in staggered payments over the next 4 years and this may be clearly stated in the agreement but the fact is the church has no collateral or further control over the land. Exsim can very well stretch out the payment over the next 10 years or ask for a discount. In the worse case, the matter may end up in the civil courts for years.


Two Directors of Exsim have agreed to guarantee the RM35 million balance amount but however, their personal net worth is unknown and therefore, it is difficult to ascertain if their guarantee is worth the outstanding debt. Besides, enforcement of guarantees can only be commenced after ALL ATTEMPTS of recovery from Exsim have been executed.


This is the most obvious sign that Pastor Prince Guneratnam (PG) has become so desperate to get his CCC built that basic common sense and rationale no longer prevailed.


PG’s desperation bodes well for Exsim.

Why was Exsim selected to be so “blessed” by Calvary Church remains a big question mark?


Who is Exsim?


Actually, very little is known about this joint venture partner of Calvary Church. As reported in our earlier article, Exsim Group is a small, industrial and commercial lot developer, which recently undertook a residential condo development called the “The Treez” in Bukit Jalil.


From the Exsim website and “The Treez: brochure, the “the Treez” project was developed by Jalilmax Development Sdn Bhd,.


A search at the Companies Commission revealed that Jalilmax was incorporated on 8-8-2005. The directors of Jalilmax are Lim Aik Hoe, Lim Tau Fong and Lim Aik Kiat. Exsim Development Sdn Bhd is listed as the current owners of Jalilmax.


On the other hand, Exsim Development Sdn Bhd was incorporated only on 14-10-2009 with a paid-up capital of only RM100,000. Its directors are Chong Peck Ee, Loo Yoke Foong, Puang Wan Ching and Wong Siong Lin.


The directors of Exsim and Jalilmax are totally different people. Perhaps, the information
available from the Companies Commission has not been updated but the fact remains that Jalilmax was set up earlier and taken over by Exsim only after 14-10-2009.


With only a paid-up capital of RM100,000, Exsim does not even qualify to apply for a Developer’s Licence. The law requires a Developer to have a minimum paid-up capital of RM250,000 before they can be issued a licence to commence any property development.


It is quite likely that Exsim will incorporate a new subsidiary company to undertake the development of Calvary’s commercial land as is normally the case with property development groups where the holding company remains purely an investment holding company while the subsidiaries are the actual developers. This is to protect the holding company from legal liabilities should any development goes sour or gets entangled legally or financially.


The gross development value (GDV) of Exsim Group’s total projects are a mere fraction compared to the GDV of the big players like Sunway, Glomac, Sime Darby, MK Land, SP Setia, and Sunrise whose GDVs run into tens of billions of ringgit.


So is PG taking a “gamble” with a small company like Exsim? He certainly is!


With the 2013 Pentescostal World Conference in Kuala Lumpur looming near, PG is desperate. He had already announced to the world that he is hosting the conference in CCC and so, it will be a huge loss of face for him, if the CCC is not completed in time.

Blessed Christmas & Happy New Year

Calvary Enters JV with Property Developer

Calvary enters JV with property developer

After banks reject loans to CCC

At the recent EGM of Calvary Church held on 23 September 2011, the Board of Deacons announced that all their recent loan applications to various Banks to finance the construction of the Calvary Convention Centre (CCC) have been rejected.

Previously, the Church had only managed to secure a RM35 million loan from Alliance Bank and a RM8 million loan from Public Bank. However, the Church is still short of at least RM75 million to complete the project.


The wasteful RM300 million project (Phase 1 and 2) has been plagued with problems after problems since commencement of works. Despite the recent fanfare of the cornerstone-laying ceremony at the site, the ability of the Church to complete the CCC remains in doubt.


Having failed to secure additional Bank borrowings, the Church is now embarking into a Joint Venture with a small Property Developer to develop the 1.75 acre commercial land adjoining the CCC site to build Serviced Apartments. The Developer, Exsim Development is a relatively new industrial park Developer with 2 on-going industrial developments in Bukit Rimau and Kota Damansara. Recently, they ventured into their first condo development at Bukit Jalil called the Treez.


The Joint Venture between the Church and Exsim has been disguised as a sale of land at a highly inflated price of RM55 million with payments staggered until 2015. Deacon Zoo Gin admitted during the presentation that the market value of the land is only about RM17 million. From this, it can be inferred that the difference of RM38 million represents the profit share from the proposed apartment development.

The obvious reason to camouflage the Joint Venture as a sale is for tax planning purposes (defined as the legal form of tax evasion). The other reason is aptly said by Senior Pastor Prince Guneratnam (PG) at the EGM that “we do not want to be seen as going into business”.


Zoo Gin claimed that the Board had consulted a Tax Agent on the tax implications of the sale and the Tax Agent has opined that the sale transaction, although at inflated price, falls under the Real Property Gains Tax and therefore, the gain is not taxable as the Church has held the land for more than 5 years. (If the sale proceeds is recorded as profit share from property development, the entire RM55 million less the original cost of land will be taxable.)


Zoo Gin clarified that the land title will be transferred to Exsim only upon full payment of the RM55 million. Should this be the case, then when the Apartments are sold, the individual Sale and Purchase Agreements will surely state Calvary Church as the Landowner and Exsim as the Developer.


In such a scenario, how then, is the Church going to convince the Tax Department that this arrangement is not a Partnership or Joint Venture and should not be taxable? PG and his Deacons may fool the members but can they fool the Tax Department?


This commonly used strategy of hiding profits from property development in marked-up Sale and Purchase Agreements can easily be challenged by the Tax Department. The Church will run the risk of public exposure and a fine but the worst consequence is the embarrassment it will bring to the Christian community.




The Calvary-Exsim Deal

Exsim will buy the land for RM55 million on a staggered payment basis as follows:-



Upon signing the Sale and Purchase agreement, Exsim pays the church 2% of Purchase Price equal to RM1.1 million. This earnest money is refundable should the Development Order (DO) for Apartment Development not be approved by DBKL. In such an event, Zoo Gin said that with the refund to Exsim, the status would be back to square one.

Exsim will pay the church RM13.0 million in February 2012 from a Bank loan which Exsim will obtain by charging the commercial land to the Bank. Exsim will bear the interest cost on this RM13.0 million loan. This will be a Third Party Charge as the land title would still be in the Church’s name. By this time, the Church would have received RM14.1 million but the land would have been charged to a Bank. Deacon Zoo Gin told the members that this is OK because the land was bought for RM7.0 million and the present value is RM17.0 million.

Exsim will pay the Church RM2.0 million a month from July to December 2012 totalling RM12.0 million and the balance of RM28.9 in quarterly instalments from March 2013 to December 2015.

In addition to the RM55.0 million, Exsim will make a donation of RM1.5 million to the CCC building fund. This donation will be paid in 2013.

The reason why Exsim was chosen

Zoo Gin informed the members that they had 3 proposals from 3 parties namely Seal Group Bhd, E & J (the contractor doing the reinforced concrete work for CCC) and Exsim. Seal Group Berhad did not turn up for the interview because they could not meet the Church’s requirements while E & J is merely a Contractor and not a Developer. Zoo Gin claimed that no other Developer was interested although invited. Therefore, Exsim was the only option.

Zoo Jin said that they have checked Exsim’s financials and found their financial strength to be “sufficient and acceptable”. A member asked him to elaborate with figures. He declined saying that it is not appropriate to disclose at the public meeting. Either he had something to hide or he was simply ignorant of the fact that private limited companies’ financials, shareholders and directors’ details are in the public domain and can be easily obtained from the Companies Commission.

Who is going to bear the risk should this JV deal not work?

Exsim has a very good deal. They only pay a refundable deposit of RM1.1 million for the option to develop the land with absolutely no risk. Even if they take up a loan in their own name to pay the Church the second payment of RM13 million, they are not at risk as the collateral is the Church land. The risk is on the Church. In the event of a default in loan repayment by Exsim, the Church will have to come out with the money to repay the bank or stand to lose the land.


Even if the DO is obtained, there is no certainty that the Apartment Development will sell. In order for Exsim to pay the Church RM55 million and still make a development profit, Exsim will have to build about 400 apartments and sell them for at least RM750,000 each to generate a gross development value of RM300 million, based on an average development profit of 30%. That is certainly a tall order for that locality and during a time of anticipated severe economic downturn by the time the apartment project is launched. If Exsim does not make profit, then the Church may not receive the full sum of RM55 million.

With such risks and the uncertainty of getting the full payment of RM55 million, why then is PG and his Deacons pushing for this transaction?

Rumours of a side deal are aplenty especially since it is an open secret that all, if not most, of the final negotiations with contractors and suppliers and probably in this case, Exsim as well, are done by PG and his son alone. That aside, without doubt, it is definitely a case of pure desperation that PG and his Deacons are willing to take this risk. The clock is ticking fast and money is just not coming in as PG had hoped.

On the EGM, it was good to note that there are new faces who are beginning to ask questions but unfortunately these voices are still few in numbers. Without saying, of course, the supporters of PG at the EGM, shouted praises to God and voted yes to the sale.

Clip #1 : Listen to the 3 Options presented by Zoo Gin.




Clip 2 : Listen to the terms of the JV