EC World Reit extends trading suspension, needs time to ‘resolve uncertainties’
Paige Lim
EC WORLD Real Estate Investment Trust (EC World Reit) has extended the suspension on the trading of its units, its manager said in a bourse filing late on Thursday (Sep 21).
The Reit manager said it had told unitholders that it had satisfied the Reit’s trustee, DBS Trustee Limited, that it was in the best interest of unitholders for the dealing in units to remain suspended.
The Reit’s units have not been traded since Aug 31; that was when the manager disclosed that the ECW Group, comprising the Reit and its subsidiaries, could not fully repay its offshore interest expenses.
Earlier on Thursday, the manager announced that around 11.3 million yuan (S$2.1 million) had been released from its onshore interest reserve to repay, in full, the Reit’s onshore interest expenses, which had fallen due on Wednesday (Sep 20).
In the latest bourse filing, the manager said the suspension on the trading of the units would give ECW Group time to work on resolving several “uncertainties” pertaining to the group’s financial position. It would also ensure that no trading takes place without unitholders “having the sufficient information required to make an informed decision”.
Referring to the “uncertainties”, the manager noted that firstly, as at Jun 30, the Reit’s current liabilities exceeded its current assets by S$117.9 million, and that ECW Group’s current liabilities exceeded the group’s current assets by S$133.2 million.
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Within its current liabilities, the ECW Group has borrowings of S$443.2 million that are due for repayment within a year from Jun 30, 2023.
The manager added that the tenure for the group’s existing offshore facilities ends on Apr 30, 2024, subject to the consent of the offshore facilities lenders and certain conditions being met.
There could be a further extension of the initial termination date until Apr 30, 2026, the manager noted. However, any extension is contingent on the group successfully completing its proposed divestment of Stage 1 Properties of Beigang Logistics and Chongxian Port Logistics, as well as making certain mandatory repayments to its lenders under its onshore facilities, and its offshore facilities lenders.
Secondly, ECW Group is owed more than 145.8 million yuan (S$27.5 million) in overdue rent receivables by its sponsor group Forchn Holdings and its subsidiaries. The manager said it is working with the sponsor group on a repayment plan.
Thirdly, the manager said that as of Thursday, relevant lenders were reviewing its request to extend the deadline to top up the offshore interest reserve maintained by ECW Group, as well as to not accelerate the facilities.
Fourthly, the manager noted that it has yet to receive confirmation from the sponsor group that it has secured the requisite funding to complete the proposed divestment, which must take place by Oct 31, 2023. The ECW Group must pay the relevant mandatory prepayment amount by the divestment long-stop date.
The manager said that the board of the manager was evaluating the options for EC World Reit, and give unitholders updates when there are material developments. It will seek to lift the trading suspension “as soon as it is appropriate to do so”, without compromising the interests of unitholders.
In a final cautionary statement to unitholders, the manager stressed that there was “no certainty or assurance” that any talks or prospects would be successfully concluded, or any agreements related to any transactions would be entered into. It also could not guarantee that any previously announced transactions would be completed by the stipulated long-stop date, or completed at all.
It added that unitholders should consult their stockbrokers, bank managers, solicitors or other professional advisors if they have doubts about what they should do.
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