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Suntec Reit pumps S$40m into convention centre to weather Covid-19 storm
SUNTEC Real Estate Investment Trust (Suntec Reit) has bumped up its stake in Harmony Investors Group (HIG), which indirectly holds Suntec International Convention and Exhibition Centre, for a total of S$40 million.
The trust's wholly-owned subsidiary, Suntec Harmony, subscribed for new HIG ordinary shares directly as well as indirectly through Harmony Partners Investments (HPI).
The purpose of this capital injection is to support the convention and exhibition centre "in the face of challenges to the meetings, incentives, conventions and exhibitions (MICE) industry in Singapore due to the Covid-19 pandemic", Suntec Reit's manager said on Wednesday evening.
To fund the business needs of Suntec International Convention and Exhibition Centre, HIG had issued an equity call notice to its two shareholders, Suntec Harmony and HPI.
HPI then issued an equity call notice to its own shareholders, including Suntec Harmony, to finance its portion of HIG's equity call.
The other shareholder of HPI did not subscribe for its portion of HPI's equity call. Suntec Reit, through Suntec Harmony, thus subscribed for this other shareholder's portion, in addition to its own portion.
Before the subscription, Suntec Reit had an effective interest of 60.8 per cent in HIG, seeing as Suntec Harmony owned 20 per cent of HIG and 51 per cent of HPI, while HPI in turn held 80 per cent of HIG.
Following the subscription, Suntec Reit's share in HPI has increased to about 57.9 per cent, and its effective interest in HIG now amounts to about 66.3 per cent.
In the MICE industry, international and large-scale trade fairs have taken a hit from travel restrictions amid the Covid-19 pandemic, while smaller-scale meetings and events are affected by safe-distancing measures.
The Suntec convention and exhibition centre has been temporarily closed till Aug 2, 2020 to reduce operating costs and navigate the downturn.
"The temporary closure may be extended if mandated measures are prolonged," Suntec Reit's manager said on Wednesday.
"The recovery will be slow in 2020, led by smaller-scale events, meetings and consumer shows when current measures on safe distancing are eased. International conventions and events will remain weak due to slower recovery in international travel," it added.
The Suntec convention and exhibition centre is a popular MICE venue in Singapore and brings footfall to the adjacent Suntec City mall, which Suntec Reit wholly owns.
Suntec Reit funded the S$40 million subscription amount from proceeds of medium-term notes issued in May this year.
Units of the trust gained S$0.02 or 1.4 per cent to finish Wednesday at S$1.43 before the announcement.