First Reit unitholders vote in favour of proposed restructuring

Singapore

UNITHOLDERS of First Reit on Tuesday voted in favour of the proposed restructuring of the Lippo Karawaci (LK) master lease agreements (MLAs), as well as the whitewash resolution waiving the right to receive a takeover offer from First Reit's substantial shareholder OUE.

At the Reit's extraordinary general meeting held on Tuesday, unitholders representing some 91.33 million units, or 91.25 per cent, voted in favour of the first resolution related to the proposed restructuring. Unitholders representing some 90 million units, or 90.5 per cent, voted in favour of the whitewash resolution.

The restructuring of LK's MLAs with First Reit comes amid the risk of LK defaulting on its obligations under the existing terms, given that it has been in a negative cash flow position since 2015. In FY2019, First Reit's 11 MLAs with LK constituted about 72 per cent of the Reit's rental income.

The second resolution was to pave the way for a proposed 98-for-100 renounceable rights issue by First Reit, at S$0.20 per unit, to raise gross proceeds of S$158.2 million.

Unitholders did not vote directly on the proposed rights issue. They instead voted on a waiver of their rights to receive a general offer for their units in First Reit from an OUE subsidiary that is underwriting the issue.

First Reit now has about S$400 million in debts, of which S$196.6 million is due on March 1. It plans to use about S$140 million of the S$158.2 million in gross proceeds raised to repay its upcoming debt. The remaining money will be set aside for professional and other fees incurred, master lease restructuring costs and working capital.