THE manager of EC World Reit : BWCU 0% is seeking a time extension from the Singapore Exchange and the Monetary Authority of Singapore for the deadline to hold its annual general meeting, from Apr 30 to Jul 27.

The reason is the delay in the divestment of two Chinese logistics assets, which in turn has held up its settlement of a mandatory repayment, EC World Asset Management disclosed in a bourse filing on Good Friday (Apr 7).

Back in October last year, EC World Reit said that it would be divesting its indirect interests in Bei Gang Logistics and Chongxian Port Logistics for 2.03 billion yuan (S$392.7 million). Part of this was to repay outstanding onshore and offshore loans. However, this has not been completed.

As the bourse regulator noted last month, EC World Reit’s liabilities stood at S$1.1 billion but it only had cash of S$113.3 million. Its short-term liabilities were about S$818.5 million

As a result of the divestment and repayment delays, the Reit’s external auditor does not have sufficient audit evidence to form a conclusion on the likelihood of the mandatory repayment by Apr 30 – and as a result, the appropriateness of the assumption used in the FY2022 financial statements.

The mandatory repayment deadline of Feb 28 has passed, and there is no confirmation on the finalisation of the new repayment plan to postpone this deadline to Apr 30, the auditor noted. The refinancing of EC World Reit’s April 2023 outstanding loans is also still in progress.

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EC World Reit’s financial position and ability to continue operating as a going concern “are largely dependent on the completion of the proposed divestment and the progress of the new repayment plan and the refinancing of the Apr 2023 outstanding loans”, the manager said.

However, the board has assessed that EC World Reit is able to operate as a going concern, on the basis that the lenders are in the process of obtaining their internal approvals for the new repayment plan.

The Reit has also not received any indication from the lenders that they intend to accelerate the existing offshore and onshore bank loans at this juncture.

“The sponsor continues to demonstrate its support for EC World Reit and in this regard, it has provided RMB258 million, S$4.4 million and US$7.55 million in funds since Dec 30, 2022 to date, which are intended to be used towards partial settlement of the mandatory repayment,” the Reit manager said in its filing.

It added that “while the Covid-19 situation has affected businesses in China generally, the revenue and net property income from ECW’s properties remain strong with some organic growth”.

EC World Reit units had closed at S$0.305 on Thursday, up 1.7 per cent, before Good Friday.