EHT granted temporary aggregate leverage waiver by MAS, US financing facility approved

BELEAGUERED Eagle Hospitality Trust (EHT) has received a waiver from the Monetary Authority of Singapore (MAS) and authorisations from the United States Bankruptcy court as it moves ahead with the bankruptcy proceedings.

EHT, which is a stapled trust comprising Eagle Hospitality Reit (EH-Reit) and the currently dormant Eagle Hospitality Business Trust (EH-BT), is now being managed by DBS Trustee - as EH-Reit's trustee - after a proposed change of manager fell through.

DBS Trustee said in an announcement on Thursday evening that the United States Bankruptcy Court had, at a hearing on Jan 21, authorised the joint administration of the cases of all EHT entities that had filed for Chapter 11 bankruptcy in the District of Delaware.

The court had also approved the debtor-in-possession (DIP) financing facility from Monarch Alternative Capital on an interim basis, allowing the EHT entities to borrow up to US$9.3 million until the next hearing on Feb 11.

DBS Trustee had previously said that Monarch will extend a DIP credit facility of up to US$100 million to the Chapter 11 entities, and this facility can be increased to as much as US$125 million.

The entities were also authorised by the court on an interim basis to pay critical vendors for the ongoing operations and maintenance of the hotels in its portfolio.

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In addition, the court appointed the chief restructuring officer of the entities to act as the foreign representative in any Singapore proceedings, and confirmed the application of the worldwide automatic stay in respect of any claims against the entities which prevents any enforcement action or the start or continuation of other legal proceedings against the entities.

Documents lodged on Jan 18 cited Alan Tantleff, senior managing director at FTI, consulting as the chief restructuring officer.

In Singapore, the MAS has granted EH-Reit a temporary waiver from its property funds appendix which states that its total borrowings and deferred payments should not exceed 50 per cent of its deposited property before Jan 1, 2022, and 45 per cent after that date.

As at end-September 2020, EH-Reit's aggregate leverage stood at 65.5 per cent, due primarily to the most recent valuations of its properties.

DBS Trustee had made an application for the waiver to MAS as the DIP financing will result in an increase in EH-Reit's aggregate leverage. The waiver will end on March 31, 2022.

DBS Trustee previously said the Chapter 11 filings would allow for a stable and collective process to protect the Chapter 11 entities and their assets.

Current troubles for EHT include a list of defaults, legal proceedings and employment-related claims.