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Hot stock: EHT down 10.9% days after disclosing sponsor’s links to biggest investor
STAPLED securities of Eagle Hospitality Trust (EHT) fell as much as 10.9 per cent in early morning trade on Tuesday.
As at 11.30am, the counter traded at US$0.423 or 5.2 US cents lower compared with the previous day’s closing price of US$0.475. When the market opened on Tuesday, EHT stapled securities fell 6.3 per cent to US$0.445.
On Monday, the counter closed 9.5 per cent lower.
The trust had on Oct 2 disclosed that asset management firm ASAP sold six hotels to EHT’s sponsor ahead of EHT's initial public offering (IPO) to gain transaction certainty independent of the IPO process.
This was in response to Singapore Exchange (SGX) queries, which saw the bourse questioning the rationale for the sale to be conducted in such a manner, as opposed to a direct sale of the hotels to the trust.
EHT said ASAP is independent from the sponsor and the managers. It had, in an earlier report by The Business Times, confirmed that Frank Yuan, its single largest shareholder during its IPO, sold EHT’s sponsor Urban Commons six of the 18 hotels that eventually formed EHT’s IPO portfolio.
EHT told BT at the time that there was no legal requirement to disclose the relationship.
In its response to SGX, EHT said its sponsor entered into the purchase agreement to acquire the six hotels in March 12, 2019. The six hotels were later acquired by EHT from the sponsor on May 24, which is EHT’s listing date.
Shareholder Mr Yuan is the chief executive of ASAP, a California-based acquisition advisory and asset management firm specialising in hotel assets. He had taken 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.