ESR-Reit to issue 263m new units to raise S$142m

THE manager of ESR-Reit on Tuesday announced details for its pro-rata and non-renounceable preferential offering of up to 262.8 million new units at S$0.54 each to raise gross proceeds of up to S$141.9 million.

This will be done on the basis of 199 new units for every 1,000 existing units in the trust held as at 5 pm on March 7, 2018.

The issue price is a 7.1 per cent discount to the volume weighted average price of S$0.5812 per unit done on Feb 27, 2018.

The Reit's sponsor, ESR Cayman, has provided an irrevocable undertaking to accept the provisional allocation of new units and subscribe for the excess units to the extent that its subscription does not exceed S$125 million.

The sponsor has a 12.4 per cent stake in the trust.

Mitsui & Co, which owns 1.6 per cent of the trust, has also provided a commitment letter to accept its provisional allocation of new units in full.

The net proceeds will be used to reduce the debt facilities used to partially fund the acquisition of 7000 Ang Mo Kio Avenue 5.

"Taking into account the undertaking and the commitment letter, the minimum proceeds to be raised from the preferential offering will be sufficient to meet ESR-Reit's present funding requirements. The proceeds to be raised from the preferential offering will be sufficient to enable ESR-Reit to meet its obligations and continue to operate as a going concern," the manager said.