EC World Reit fails to top up interest reserve, at risk of immediate loan repayment demands
Tay Peck Gek
THE manager of EC World Real Estate Investment Trust (Reit) announced that the China-focused Reit has failed to top up the offshore interest reserve within the requisite five business days of its release.
If the Reit does not remedy the breach and top up that reserve within 10 business days, an event of default pursuant to the offshore facilities would arise and also trigger a cross-default under the existing onshore facilities of EC World Reit and its subsidiaries.
EC World Asset Management, in a bourse filing on Tuesday (Sep 12), provided the update to unitholders of the Reit, which invests in e-commerce, supply-chain management and logistics assets.
About S$3.4 million of the offshore interest reserve was used to fully repay the group’s interest expenses due end-August for existing offshore facilities.
The relevant lenders, as at the time of the announcement, were said to be in the process of reviewing the manager’s requests for an extension to top up the offshore interest reserve as well as not to accelerate repayments.
In addition, as units of the Reit have been suspended from trading for more than five consecutive trading days, the majority lenders under the offshore facilities have the right to declare all such loans and accrued interest immediately due and payable.
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EC World Reit units last changed hands at S$0.28 on Aug 28. They have been suspended from trading since Aug 31.
As at the time of the bourse filing, the manager has not been informed by the relevant lenders that they intend to accelerate the offshore and onshore facilities, or require any mandatory prepayment as a result of the suspension of trading in the units.
EC World Reit and its subsidiaries are owed more than 145.8 million yuan (S$27.2 million) in overdue rent by their sponsor group Forchn Holdings and its subsidiaries. The manager had flagged a “high risk” of non-collection of the rent receivables.
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