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OUE C-Reit, H-Trust merger deal 'fair' and 'based on normal commercial terms': IFAs

THE independent financial advisers (IFAs) of OUE Commercial Reit (C-Reit) and OUE Hospitality Trust (H-Trust) have advised the directors of both trusts to recommend unitholders “vote in favour” of the merger at separate upcoming extraordinary general meetings (EGM).

Under the proposed scheme, OUE C-Reit will acquire OUE H-Trust by paying OUE H-Trust holders, for every OUE H-Trust stapled security held, S$0.04075 in cash plus 1.3583 new OUE C-Reit units. 

This translates to a deal valuation of S$1.49 billion in total, with S$74.6 million in cash and the remaining balance paid by the issue of about 2.5 billion new OUE C-Reit units to OUE H-Trust holders at S$0.57 per OUE C-Reit unit.

Deloitte & Touche, the IFA of OUE C-Reit, said the merger is based on normal commercial terms and will not be prejudicial to the interests of OUE C-Reit and its minority unitholders.

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Directors of the company have thus recommended that OUE C-Reit unitholders vote in favour of resolution 1 which relates to the potential merger, and resolution 2 which relates to the proposed issuing of new OUE C-Reit units. If either resolution is rejected, the proposed merger will not go through.

Meanwhile, ANZ, the IFA of OUE H-Trust, called the terms of the trust scheme "fair and reasonable" based on the scheme consideration and consideration unit price as at June 25.

Directors of OUE H-Trust have thus recommended OUE H-Trust stapled securityholders vote in favour of the trust deeds amendment resolutions at the upcoming EGM, and the trust scheme resolution at the trust scheme meeting.

The two EGMs are expected to take place on Aug 14 at Mandarin Orchard Singapore, at 10am for OUE C-Reit unitholders and 3pm for OUE H-Trust unitholders.

Both trusts have also invited unitholders to participate in a SIAS dialogue session relating to the proposed merger, one for OUE C-Reit on July 29 and OUE H-Trust on July 30. (see clarification note)

Should the proposed merger go through, OUE Group, the parent company of both trusts, will continue to retain a 48.4 per cent in the enlarged Reit. (see clarification note)

The merged entity is said to be one of Singapore's largest Reits by assets, with seven properties under its umbrella: four from OUE C-Reit — OUE Bayfront, One Raffles Place, OUE Downtown Office, Lippo Plaza, and three from OUE H-Trust — Mandarin Orchard Singapore, Mandarin Gallery and Crowne Plaza Changi Airport.

As at 9.34am, OUE H-Trust shares were trading at S$0.73, up 0.5 Singapore cent or 0.69 per cent; while OUE C-Reit shares were trading at S$0.53, up 0.5 cent or 0.95 per cent. OUE Group shares were trading at S$1.55, up two cents or 1.31 per cent. 

Clarification note: OUE C-Reit has clarified that OUE Group will continue to hold a 48.4 per cent in the enlarged Reit and not 48.3 per cent. It has also clarified that both companies will hold separate EGMs and SIAS dialogue sessions.