EC World Reit’s manager assuages concern about its going concern
Tay Peck Gek
EC WORLD Reit ’s manager said that the real estate investment trust (Reit) has adequate current assets to meet its short-term liabilities, in its response to queries from the Singapore Exchange (SGX).
It was commenting on whether the China-focused player with e-commerce, supply-chain management and logistics properties would be able to meet its short-term liabilities of about S$818.5 million. The bourse regulator noted that the group’s liabilities stood at S$1.1 billion but only had cash of S$113.3 million, as shown in the group’s condensed interim financial statements.
EC World Asset Management replied on Friday (Mar 10) that 64 per cent and 82 per cent of lenders involved in existing onshore and offshore bank loans respectively have obtained internal approvals and are agreeable to a new repayment plan. The remaining lenders, stated EC World Reit’s manager, are “in the process” of obtaining internal approvals for the new repayment plan.
Also, it noted that the Reit is in the process of completing proposed divestment of its indirect interests in Bei Gang Logistics and Chongxian Port Logistics at the agreed property values of 1.2 billion yuan (S$235.7 million) and 820 million yuan respectively, with the proceeds adequate to meet the mandatory loan repayment.
The sponsor, it added, has been discussing with financial institutions and investors on securing financing for the purchasers of the proposed divested assets.
The manager also noted that the group will be in a net current asset position of S$180.1 million immediately after the completion of the proposed divestment, settlement of existing loans under the new repayment plan and the refinancing of April outstanding loans.
On the question whether the financial statements were correctly prepared on a going concern basis when the group and the Reit’s current liabilities exceeded current assets by S$228.6 million and S$131 million respectively and that the group has S$586.3 million due for repayment by December 2023, the manager said the sponsor had placed 200 million yuan into escrow for the sum to be eventually used for partial settlement of mandatory loan repayment.
The sponsor, the manager added, last Friday further demonstrated its support for the Reit by paying an additional US$1.5 million to the Reit. The sum is intended for the partial repayment of existing offshore bank loans.
EC World Reit unit price was down 2.9 per cent to S$0.33 on Friday, before this response was published.
Copyright SPH Media. All rights reserved.
