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EHT responds to SGX queries on Urban Commons' links to EHT's biggest investor
ASSET management firm ASAP sold six hotels to Eagle Hospitality Trust's (EHT) sponsor ahead of EHT's initial public offering (IPO) to gain transaction certainty independent of the IPO process, said EHT.
The trust was responding to queries from the Singapore Exchange (SGX), which questioned the rationale for the sale to be conducted in such a manner, as opposed to a direct sale of the hotels to the trust.
In a filing to the bourse on Saturday, EHT said: "ASAP is independent from the sponsor and the managers. ASAP sold the ASAP6 portfolio to the sponsor prior to the IPO in order to gain transaction certainty independent of the IPO process."In a recent article in The Business Times (BT), EHT confirmed that its single largest shareholder during its IPO, Frank Yuan, sold EHT's sponsor Urban Commons six of the 18 hotels that eventually formed its IPO portfolio. EHT told BT then that there was no legal requirement to disclose the relationship.
Responding to SGX's queries, EHT said that its sponsor entered into the purchase agreement to acquire the six hotels from ASAP on March 12 this year; the six hotels were later acquired by EHT from the sponsor on May 24, which is EHT's listing date.
Mr Yuan is EHT's largest shareholder and the chief executive of ASAP, a California-based acquisition advisory and asset management firm specialising in hotel assets. Mr Yuan took a 16.2 per cent stake in EHT by way of a placement during the IPO in May but later pared his stake to 13.7 per cent.
ASAP is run by (among others) Mr Yuan, Norbert Yuan and Jerome Yuan - who "have a family relationship", EHT clarified. As at May 24, the three of them collectively held 289.74 million stapled securities, or 33.4 per cent of the total number of stapled securities, in EHT. According to EHT, the three of them subscribed for the stapled securities in the placement tranche at the IPO price of US$0.78 per unit.
Responding to a query from SGX on whether the relationships between the Yuans, ASAP and the six hotel assets were disclosed, EHT said: "Given that ASAP is unrelated to the sponsor and the managers and that EHT acquired the ASAP6 portfolio from the sponsor, there was no requirement to disclose the Yuans' relationship to the ASAP6 portfolio."
It added that it was disclosed in the prospectus that EHT had acquired the ASAP6 portfolio directly from its sponsor, which had in turn acquired it from ASAP before the listing date.Units in EHT closed at 52.5 US cents on Friday, down 3.5 cents.