EHT sets up special committee to negotiate with lenders, oversee strategic review

Singapore

A SPECIAL committee of directors has been set up with a focus on "safeguarding value for and protecting the interests of" Eagle Hospitality Trust's (EHT) stapled security holders.

The five-member committee comprises all of EHT's independent directors and the managers' chief executive officer. They are Carl Gabriel Florian Stubbe (who will chair the special committee), Davy Lau, Tarun Kataria, Kelvin Tan Wee Peng and Salvatore Takoushian.

They will oversee matters relating to the strategic review and the voluntary trading suspension announced last week, EHT's managers said on Wednesday.

On March 24, the managers suspended trading in EHT securities while disclosing that they had received a demand for the immediate repayment of a US$341 million syndicated loan. Bank of America (BofA), the administrative agent for a syndicate of lenders that provided the loan, issued a notice of default and acceleration to the managers.

The special committee will discuss with BofA and the syndicate lenders in respect of the facilities agreement and the notice of default and acceleration, the managers said on Wednesday.

The committee is also in the process of selecting a financial adviser.

It has been engaging "on multiple fronts" with BofA and the syndicate lenders as well as other counterparties, including the master lessees and EHT's other lenders, the managers said.

The committee aims to obtain a longer-term forbearance agreement with BofA and the syndicate lenders, including a "consensual strategy" moving forward.

To this end, EHT has entered into documentation with BofA and the lenders to facilitate and govern further discussions, and for a temporary forbearance from exercising their asserted rights and remedies pending further talks.

The key conditions to the temporary forbearance are that payment of the distribution to EHT stapled security holders must be suspended and no withdrawals may be made from the distribution bank account while discussions with BofA and the syndicate lenders are ongoing.

The declared distribution of 3.478 US cents per security was not paid to holders on the original scheduled payment date on March 30. The distribution is for the period from EHT's listing date of May 24, 2019 to Dec 31, 2019.

"There is no certainty or assurance as to if and when the distribution can or will be made at all," the managers reiterated on Wednesday.

They added that they are working as quickly as possible to achieve the best outcome for EHT stapled security holders amid the "dire" global hospitality environment.

An event of default had occurred for the US$341 million loan due to master lessees' non-payment of rent to EHT under the master lease agreements (MLAs). This was due to steep declines in occupancy levels amid the coronavirus pandemic, which then reduced the income productivity of EHT's properties and impeded the ability of master lessees to pay rent, the managers said last week.