The manager of EC World REIT says it is in “discussions” with the lenders of its existing offshore bank loans and existing onshore bank loans to work out a “debt repayment plan” pertaining to the mandatory repayment.
The mandatory repayment is due on Dec 31.
Under the repayment plan, the REIT’s sponsor will provide funding for the REIT to pay its lenders a portion of the mandatory repayment by Dec 31, says the REIT manager in its Dec 26 statement.
The payment for the remaining sum will be deferred to a date falling within the first quarter of 2023.
“The lenders are in the process of obtaining the relevant internal approval for the repayment plan,” reads the statement. “The manager expects there to be an outcome by Dec 31 and will update the unitholders with the details relating to the repayment plan in due course.”
Should the manager and lenders fail to agree on a debt repayment plan by Dec 31, EC World REIT would be in breach of its mandatory payment obligations. It would then trigger an event of default under the existing offshore bank loans and existing onshore bank loans.
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On June 28, 2019, the manager of EC World REIT announced that the REIT’s wholly-owned subsidiary, ECW Treasure and Zhejiang Fuzhou E-Commerce Co., Ltd. entered into an offshore facility agreement with various banks. The agreement was coordinated by DBS Bank and United Overseas Bank (UOB) as lenders for an aggregate principal amount of up to $424.5 million.
The offshore facility consists of a multicurrency term loan facility of up to $355.0 million, a Singapore dollar (SGD) term loan facility of up to $22.5 million, as well as a multicurrency term loan facility of up to $47.0 million.
At the same time, EC World REIT’s wholly-owned subsidiaries, Hangzhou Chongxian Port Investment Co., Ltd., Hangzhou Bei Gang Logistics Co., Ltd., Zhejiang Hengde Sangpu Logistics Co., Ltd. and Zhejiang Fuzhou E-Commerce Co., Ltd. entered into an onshore facility agreement coordinated by DBS Bank (China) Limited, Hangzhou branch and UOB (China) Limited, Hangzhou branch, as lenders for an aggregate principal amount of up to RMB1.095 billion consisting of two term loan facilities of RMB1.018 billion and RMB77.0 million respectively.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
The facilities were for a tenure of approximately three years, save for the RMB 77.0 million portion of the onshore facility which has a tenure of 10 years.
DBS Group Research analysts Dale Lai and Derek Tan issued a downgrade on EC World REIT on Nov 21 after the REIT announced that it may face a potential delay on its divestments.
“It was previously believed that EC World REIT was on track to complete the divestments of Beigang Logistics Stage 1 and Chongxian Port Logistics by the end of this year. The divestments were necessary for EC World REIT to raise funds to repay at least 25% of its outstanding debt ($707.6 million), and the preconditions set by its lenders before it would refinance EC World REIT’s loans due to expire on April 30, 2023,” they wrote.
On Nov 23, the REIT manager said that the REIT "remains as a going concern" after it was confirmed that the mandatory repayment amount had to be repaid by Dec 31.
On Dec 9, the REIT manager, through its responses to investors’ questions ahead of its Dec 16 extraordinary general meeting (EGM), confirmed that an event of default will trigger cross-defaults across the REIT’s other existing facilities.
On Dec 13, RHB Group Research announced the suspension of its coverage due to the ongoing uncertainties surrounding the completion of its divestment, loan refinancing, as well as ascertaining the REIT’s sponsor’s financial health.
Units in EC World REIT closed 0.5 cent lower or 1.09% down at 45.5 cents on Dec 23.
