After almost two years of a grinding business dispute and lengthy court battle, the two largest shareholders in Indochina Assets, the firm that owns the storied FCC restaurant and bar on Phnom Penh’s Sisowath Quay, have settled their differences and decided to split their holdings.
At the heart of the dispute was a difference in opinion over how Indochina Assets should manage its growing list of businesses in Cambodia, which include the FCC, the Cafe Fresco chain, the Spanish tapas restaurant Pacharan, the Quay Hotel, and Siem Reap City’s FCC Angkor and the Visaya Spa & Pool.
In the end, Steve Hayward, who had a 25 percent share in Indochina Assets, was bought out in a deal that also included him taking possession of the Quay Hotel on Sisowath Quay. Mark Ashall, chairman of Indochina Assets, will retain the FCC as well as the Cafe Fresco chain and the other Siem Reap businesses, while Mr. Hayward also has the first rights to purchase Pacharan if Indochina Assets ever decides to sell.
“The spat was a general one about management operations—who was in charge of what, which direction we were going in…what investors we were bringing in, the level of funding,” Mr. Hayward said in an interview yesterday.
“We were in corporate disarray,” he said of the firm, which began investing in Cambodia in the early 1990s and built up a stable of highly successful businesses.
Five years ago Indochina Assets also bought the aging colonial-era mansion at the back of the FCC on Sothearos Boulevard, but apart from the odd art exhibition and party, the property has not been developed. The purchase of the $2.2 million mansion in 2007, as well as a property adjacent to FCC Angkor in Siem Reap, placed strain on the company and its owners as profits increasingly went toward paying off the debt on the new acquisitions.
The dilapidated Sothearos Boulevard mansion “almost epitomizes the state of where we were,” financially and personally, Mr. Hayward explained.
The decision to split the business not only marks the end of the legal dispute, but the end of an era for Mr. Hayward, who founded Indochina Assets in 1993 and constructed the building that now houses the FCC, the investment firm’s crown jewel.
Mr. Hayward said that he is now going in his own direction, having opened Paddy Rice, an Irish-themed pub on the riverside, and more recently the Latin Quarter, a restaurant serving a medley of Latin American food on the corner of streets 178 and 19.
Mr. Ashall said yesterday that the dispute had been settled in October and that Indochina Assets was now looking to expand its presence in Cambodia.
“Essentially, we basically assigned a lease on the Quay to [Mr. Hayward] in return for his shares in the holding company,” Mr. Ashall said. “He is no longer a shareholder in the FCC.”
“As far as the Pacharan is concerned we effectively gave him the rights to first refusal in the case of the sale of Pacharan. We have the equivalent right to take the Quay back from him if he decides to sell,” he added.
“Fundamentally it came down to how we all decided to find a way to part.”
Indeed, finding a solution was not easy.
Mr. Hayward said that an initial agreement reached in March 2010 to allow him to sell his shares and take the Quay with him was not carried out on time.
“I felt totally aggrieved. I got about 10 percent of the money over 90 percent of the period.”
Mr. Hayward said he decided to extend the period of time for payment until November of that year.
But “In November they decided not to pay me and not hand me the assets. I told them they were in breach of the agreement,” he said.
The case then went to the Phnom Penh Municipal Court, where Mr. Hayward won an injunction that froze all of the assets in the company. Mr. Ashall appealed that decision though the Appeal Court upheld the lower court’s injunction.
Mr. Ashall said that the money was not paid on time due to a disagreement over which asset Mr. Hayward would take upon selling out.
“We made a choice and he disputed that choice,” he said, without elaborating.
With the dispute resolved, Indochina Assets has recently decided to halt operations at their Spanish tapas restaurant Pacharan.
Mr Hayward, meanwhile, opened his own Latin Quarter on Saturday.
“Now I’m here and I am probably their biggest competitor,” Mr Hayward added.