THE manager of EC World Real Estate Investment Trust : BWCU 0% (EC World Reit) said it has entered into a supplementary agreement to amend the terms of the divestment of its two logistics assets in Zhejiang, China.

This includes a deadline extension for the divestment, as well as a revision of prepayment terms, along with the divestment properties’ agreed values, it said in a bourse filing on Monday (Jul 10).

The supplementary agreement is subject to independent unitholders’ approval at an extraordinary general meeting to be convened.

To recap, EC World Reit had on Sep 30, 2022, entered into an equity purchase agreement to divest all of its indirect interests in Bei Gang Logistics and Chongxian Port Logistics.

Under the proposed supplementary agreement, the long-stop date will be extended to Oct 31 this year from the initial Jan 31, 2023, deadline.

This will allow more time to complete the divestment, such that the Reit will be less likely to default on financing obligations, said its manager. It also flagged that in order to complete the divestment, the purchasers will need more time to secure sufficient financing to complete the payment of the equity consideration.

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Previously, the Reit received a waiver from the Monetary Authority of Singapore to complete its proposed divestment by Jun 16 this year, on the condition that the deal be completed by Oct 31 after obtaining approval for the extended timeline from unitholders.

EC World Reit’s manager said the supplementary agreement will also provide the flexibility of a two-stage completion process, and a revision of the relevant mandatory prepayment amount.

The two-stage completion process will enable the purchasers to pay the first tranche of the divestment proceeds to the Reit earlier, thus increasing the likelihood that the Reit will be able to partially repay its loans ahead of time.

It also serves to give the purchasers more time to obtain financing for the divestment.

The original 2022 agreement required either a 25 per cent mandatory prepayment amount of the maximum aggregate amount of outstanding offshore and onshore loans, or an amount equal to a percentage of the maximum outstanding loans – whichever is higher.

Terms of this amount will be revised under the supplementary agreement to comprise an amount agreed by all of the Reit’s existing lenders.

The supplementary agreement further takes into account agreed values for the divestment properties that are higher than those set out in a circular last year.

The agreed property value of Chongxian Port Logistics is now 824.4 million yuan (S$153.7 million), up from 820.1 million yuan, while that of Bei Gang Logistics is now 1.22 billion yuan, up from 1.21 billion yuan.

These revised values, however, do not affect the agreed divestment consideration of 1.37 billion yuan, said the manager, as the properties’ updated valuations in 2023 will be slightly lower than their respective independent valuations conducted in 2022.

Units of the Reit closed up 1.7 per cent or S$0.005 at S$0.30 on Friday.