SPP

"One of the things Adnan Khashoggi was famous for in those days was his fabulous parties. Peter Munk suggested to his new partner that, in the interests of SPP, Khashoggi might consider holding parties in Australia and New Zealand. Agreement was enthusiastic and immediate. The first party was in Auckland, New Zealand, on the evening of Thursday, November 18, 1976. Adnan arrived in Auckland in his Boeing 727 with his companion, Laura Biancalini, while Essam Khashoggi flew in in his smaller DC9. Travelling with Adnan were Peter and Melanie Munk as well as David Gilmour and his London model friend, Jill Sweeny, all of whom were central to the Khashoggi bash at the Shoreline Cabaret, ‘Takapuna. Two hundred guests drank Australian bubbly, ate splendidly, were entertained by a Maori concert party and danced to one of the best bands on the island."

"Slater Walker had earlier purchased a Singapore-based pharmaceutical firm, Haw Par Brothers (Hong Kong) Limited, which was listed on the Hong Kong stock exchange—a fact that was allimportant. Haw Par bought a controlling interest in King Fung, which would be the main vehicle for what was to follow for SPP."

"Khashoggi had made his fortune mainly by collecting agent's commissions from aircraft and arms manufacturers who sold their products to Saudi Arabia. So Khashoggi’s agenda was to sell more Boeing airplanes or missiles to Saudi Arabia. Munk was concerned about the potential repercussions: “If his king or the defence minister of Kuwait or Saudi Arabia leaned on him, and said, I'll give you the contract for this jet or for these missiles, Adnan, but we know you control this big hotel company in Australia because you've got this large position in it, so would you just like to do me a favour and make them put up two hotels here in my country?—SPP could have gone bankrupt with Khashoggi in control. With us in control, he could say, Well, Peter Munk will get us out of the problem. He will build two hotels, sir, to get me the contract.” Munk refused to put himself and SPP in that position."

"ust after the Haw Par—King Fung deal was closed in March 1972, Peter Munk had already laid out a strategic objective for the new SPP. The shares of King Fung/SPP had become enormously overvalued. So unless some substance was added to the company, its shares were vulnerable to a correction in market price. Peter Munk’s urgent goal was to increase the real asset base and underlying value of SPP of Hong Kong, so he had to buy assets that were undervalued with SPP’s paper. Munk’s attention now focused on Travelodge Australia Ltd. (TAL), an Australian hotel chain, the largest in the region, that was in a tourist-related business somewhat like that of SPP. It owned and operated hotels across Australia, New Zealand, Fiji, and in many South Pacific islands and nations. Travelodge expanded too fast. They were the biggest hotel operators in the Pacific and the fourth or fifth largest Australian company. They were expanding into New Guinea, into Tahiti, into Japan, and they just ran out of money. Their shares went down from $5 to the $1.50 range."

"Munk had three inflexible rules: first, capital had to come in as equity, because debt was unacceptable; second, he had to keep operational control of the enterprise, even if he and Gilmour had less than 50 percent of the voting shares; third, he would not risk the assets of SPP’s Fiji development or of Travelodge for the Egyptian development. There would be no cross-pledging of these assets to support the financing of the SPP (Middle East) contract in Egypt."

"When we went public in ’72, the market went berserk. The shares just kept on going up. That’s when I got frightened that the market was way ahead of the value. And I said to my part- ners, “I created this, I conceived this, but you know there’s reality and then there are dreams. This is not reality.” The company was worth US$20 million, but on the Hong Kong market SPP was worth $100 million! Our shares went from $2.50 to $6. Jardine’s David Newbigging, one of my directors in SPP, gave a lunch for me. After lunch Newbigging, whom | adore, talked with me. He was a big shot, the Zaipan. He shut the door and said, “You know, Peter, Jardine’s going to have a fantastic year, because we sold much of our own SPP shares at a great profit, all because of your effort. Have you sold any shares?” I said, “Me? It’s my company.” He said, “I don’t give a damn, Peter, whose company it is. You cannot afford not to sell. You're a rich man on paper—you must also have some in cash.” I said, “I’m not a rich man, but I own a quarter of this company.” He said, “Peter, I’m older than you are. I’m wiser than you are. Please. The market is boiling. The demand is enormous. The market is still open for another hour. Why don't you take two million dollars’ worth of shares and put it in your bank?” I"