LMIRT to stop scheduled distribution of its 2016 perpetual securities for March 2023

Janice Lim

Published Mon, Mar 20, 2023 · 11:34 PM

Above: Lippo Mall Puri in west Jakarta, a mall in the portfolio of the Lippo Malls Indonesia Retail Trust (LMIRT). Unit holders of LMIRT, as well as those who bought its June 2017 perpetual securities worth S$120 million, are also at risk of not receiving any payments from the issuer. PHOTO: LIPPO MALL

THE manager of Lippo Malls Indonesia Retail Trust (LMIRT) announced on Monday (Mar 20) that it will not pay its distribution, originally scheduled on Mar 27, to holders of its S$140 million perpetual securities issued in September 2016.

It said in a bourse filing that the issuer has no obligation to pay the March 2023 distribution and the unpaid sum is noncumulative and does not accrue distribution.

Unit holders of LMIRT, as well as those who bought its June 2017 perpetual securities worth S$120 million, are also at risk of not receiving any payments from the issuer.

LMIRT’s manager said that it will apply the dividend stopper provision arising out of its discretion in stopping the March 2023 distribution of its 2016 perpetual securities, and not declare or pay any dividends or distribution on its units or the 2017 perpetual securities.

The issuer will also not redeem, reduce, cancel, buy-back or acquire any units or any of the 2017 perpetual securities.

The announcement by LMIRT comes after two rating agencies, Moody’s and Fitch, downgraded its ratings for the issuer, citing its refinancing risk.

Fitch downgrades LMIRT’s rating again as refinancing worries deepen

LMIRT continues to explore options and measures to maintain a sustainable capital structure and reduce the aggregate leverage of the trust, says its manager.

LMIRT flags potential negative effect on distributions after Moody’s rating downgrade

Although LMIRT has demonstrated an ability to “tap banks and capital markets” even during the worst of the Covid-19 pandemic, Fitch analysts say execution risks have “increased significantly” as capital market conditions have turned unfavourable.

Fitch downgrades outlook, ratings for LMIRT on refinancing risk

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Units of LMIRT closed at S$0.022, down 4.4 per cent or S$0.001 on Monday.

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