EC World Reit loans expected to be repaid or refinanced before due dates, manager assures
THE manager of EC World Real Estate Investment Trust (Reit) expects that its existing bank loans will be repaid or refinanced before they become due for repayment, it said in a bourse filing on Thursday (Dec 29).
The assurance was a response to queries from the Singapore Exchange Securities Trading (SGX-ST) after the manager on Dec 26 said the Reit’s mandatory payment due Dec 31 represents some 25 per cent of its outstanding onshore and offshore loans.
The debt remained outstanding amid continued delays to divestment plans of two Chinese logistics assets. The sum amounted to some 2.03 billion yuan (S$392.7 million). Part of the divestment proceeds were earmarked for the Reit to repay its loans.
The manager on Thursday said the lenders are in the process of obtaining internal approval for the repayment plan.
Under the plan, the sponsor will provide funding to let the Reit settle a portion of the mandatory repayment by Dec 31, with the remaining deferred to a date falling within the first quarter of 2023.
The manager also said the Reit intends to fund the mandatory repayment amount using equity consideration to be paid by purchasers of its assets on or before the sale completes.
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At this point, the purchasers have noted that they do not expect to be able to complete the proposed divestment by Dec 31. Instead, completion is expected by Jan 31, 2023.
As for whether the company’s current assets are adequate to meet its short-term liabilities of S$810 million, the manager said the current assets of the group amount to S$593.9 million as at Sep 30. Thus, the group is in a net current liabilities position of S$216.1 million, it said.
Based on the expectation that its current existing bank loans – some S$561.3 million – will be repaid or refinanced by Apr 30, 2023, it is estimated that the group will be in a net current assets position of S$141.8 million after the proposed divestment, payment of the mandatory repayment amount, and refinancing.
This calculation took into account the group’s third-quarter financial information announced on Nov 9, equity consideration and some transaction costs which were disclosed, the manager said.
“Based on all of (the) above, the manager has assessed that the ECW Group’s current assets are adequate to meet its short-term liabilities,” it concluded. The manager also said EC World will be able to operate as a going concern.
Units of EC World Reit closed down 1.1 per cent at S$0.445 on Thursday.
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