Sias asks Accordia Golf Trust manager to address concerns over planned divestment

THE Securities Investors Association (Singapore), or Sias, has asked the management of Accordia Golf Trust (AGT) to address three key shareholder concerns over a planned divestment of its golf courses to its sponsor Accordia Golf.

In a letter to AGT's manager on Wednesday, Sias noted that the valuations of the golf courses have been badly hit by the pandemic. As at May 31, they were 5.4 billion yen (S$70.8 million) lower than their Dec 31, 2019 appraised value of 141.8 billion yen. That was before the Covid-19 outbreak.

The investor advocacy group's first question was whether the independent committee had considered either delaying the transaction, or including an earn-out based on future profits, so that unitholders will not be shortchanged by a disposal of the prime assets while market sentiments are weak.

In relation to the first question, Sias asked whether the valuation reports for the golf courses have been reviewed for reliability and assurance that they were not materially understated; another issue, it said, lies in whether AGT's independent committee had considered disposing underperforming golf courses and keeping its core assets, rather than selling the entire portfolio.

In its second question, Sias asked whether it was appropriate for AGT's trustee-manager to allow unitholder Daiwa PI Partners to vote in the extraordinary general meeting (EGM) convened to consider several resolutions. Daiwa PI holds 5.36 per cent of the total outstanding units in issue and is a subsidiary of Daiwa Group, as is Daiwa Real Estate Asset Management (Dream) which owns 51 per cent of AGT's trustee-manager.

Dream has been an asset manager of the trust and received a base fee of 0.066 per cent per annum of the appraisal value of all the golf courses, golf driving ranges and other assets. Given Daiwa Group's numerous relationships with the trust, the trustee-manager and the offeror, Sias asked the independent committee to re-consider whether Daiwa Group should abstain from voting, and to let the proposed disposal depend on the votes of independent minority unitholders.

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The third area of concern among shareholders that Sias raised was the inclusion of a lengthy claim period between the first and second distribution tranches of the purchase consideration after the proposed disposal is approved.

The first tranche will pay out 92 per cent of the purchase consideration within 25 business days of the assignment date, followed by a period of three months after the assignment date in which the purchaser Accordia Golf will be able to file claims against the trustee-manager.

The second tranche of another 5 per cent will be paid out within 25 days after the claim expiry date, or the date when Accordia Golf confirms that it has no claims and no intention to file any claims in the future.

Sias asked why a claim period is necessary, since the purchaser is the controlling unitholder of the trust and a substantial shareholder of the trustee-manager. It requested that the independent committee consider asking Accordia Golf to waive the claim period, so that the second tranche can be paid out to unitholders as soon as possible.

Finally, Sias asked an additional question - that of whether investors who hold AGT units in their SRS accounts were given sufficient notice to vote on the resolutions, especially since the proposed winding-up resolution is a special resolution. The resolutions are to be voted on by AGT unitholders at an EGM to be held by Sept 14, but SRS unitholders were given a deadline of Sept 2 to submit their votes via their SRS operator if they wished to appoint the chairman of the annual general meeting and EGM as their proxy.