EHT receives request for EGM proposing rights issue, retention of manager
Uma Devi
Singapore
ENTITIES controlled by Howard Wu and Taylor Woods, holding 10.54 per cent of the stapled securities of Eagle Hospitality Trust (EHT), have requested that an extraordinary general meeting (EGM) be convened to offer securityholders of EHT another option for the revival of the currently suspended trust.
The request was made on Dec 14. Mr Wu and Mr Woods, who were, respectively, EHT's non-executive chairman and non-executive deputy chairman, have proposed two resolutions.
The first is for a rights issue of up to US$50 million worth of new units in Eagle Hospitality Real Estate Investment Trust (EH-Reit) at US$0.075 each. EH-Reit and the dormant Eagle Hospitality Business Trust collectively constitute EHT. The second is to retain or re-appoint Eagle Hospitality Reit Management (EHRM), the current manager of EH-Reit, to "the fullest extent permitted by law".
The Monetary Authority of Singapore (MAS) has instructed DBS Trustee, the trustee of EH-Reit, to remove EHRM by the end of this month.
In a statement provided to The Business Times, Mr Wu said there are "uncertainties surrounding the proposed plan" of DBS Trustee and its advisers.
DBS Trustee has put forward SCCPRE Hospitality Reit Management, a company that is linked to real estate investment management firm SC Capital, as the new manager for EH-Reit.
Securityholders of EHT will vote on the appointment of SCCPRE at an EGM on Dec 30. If resolutions required for SCCPRE's appointment do not pass, then securityholders will vote on whether to delist and wind up EHT.
Mr Wu argued, in his statement, that as SCCPRE is not being asked to contribute capital and does not currently have a stake in EHT, its appointment is not in securityholders' interests. He also took issue with SCCPRE's proposed management fee of at least S$4.5 million per year.
SCCPRE, if appointed, would receive its management fee for the next two years in stapled securities of EHT, as the trust has insufficient cash. SCCPRE could end up with a stake of between 5 per cent and 14.9 per cent of EHT, showed the circular released ahead of the EGM. "Unit securityholders should be given multiple options, and we believe our plan is simple and efficient," said Mr Wu.
In an announcement released on SGXNet, EHT's managers and trustee said they have "requested for further information... to ascertain the validity" of the requisition request. They added that the scheduled EGM on Dec 30 will proceed "given the circumstances faced by EHT, including the limited cash resources currently available".
EHT's manager and trustee have asked for more details on the proposed rights issue, including whether the requisitioning securityholders have obtained approval for such an issue, and whether any financial resources are available to backstop such an issue if needed.
They have also asked for the basis on which the present manager is to be retained, particularly since EHRM has not fully complied with the Securities and Futures Act.
EHRM had on Thursday appealed to Finance Minister Heng Swee Keat regarding the directive on its removal, but did not provide further details. BT has reached out to MAS for comment.
At a dialogue with securityholders on Thursday, organised by the Securities Investors Association (Singapore), DBS Trustee stressed that the current proposal presents the "best chance to rehabilitate EH-Reit", and strongly encouraged unitholders to "exercise their votes carefully".
