The manager of EC World REIT says it will have to defer its 1HFY2023 ended June distribution to a “future date” due to “insufficient funds”.
The distribution of 2.053 cents per unit from the period from Jan 1 to June 30 was supposed to have been made on Sept 28.
Without the payment of the outstanding rent receivables from its sponsor group, the REIT says it may also have insufficient funds to maintain its operations. In particular, it may not be able to pay its interest expenses when they are due going forward.
In its statement on Sept 27, the REIT warned that the circumstances – including its ability to pay debts – may lead to an “event of default” under its existing onshore and offshore facilities.
The circumstances may also lead the lenders under the facilities to constitute a material adverse event, which will result in an event of default.
Further to its statement, the REIT manager said that it will work with its sponsor on the repayment plan of the outstanding rent receivables and its payment obligations. It will also appoint independent consultants to evaluate the market rental of the assets leased under the master leases.
See also: EC World REIT requests for voluntary trading suspension
It will also look at appointing independent consultants to evaluate the possibility of divesting one or more properties of the ECW Group to third parties via an open-market sale.
Legal advisers will also be sought to provide advice in relation to the master leases and the equity purchase agreement dated Sept 30 between the ECW Group entities and its sponsor’s entities.
“The manager has been advised by the sponsor that the sponsor recognises the challenges that EC World REIT is currently facing and that the sponsor will continue to proactively work with the manager to explore various potential solutions to address the above-mentioned circumstances,” reads the statement.
Units in EC World REIT last traded at 28 cents.
