The most extraordinary exchange of a letter dated Jan 29 by Quarz Capital Asia, in response to a letter by HSBC Insitutional Trust Services (HSBC Trustee) to Quarz have been posted on SGXnet. HSBC Trustee is Sabana Industrial REIT’s Trustee. Quarz Capital Asia’s reasons for its 12 resolutions in a requisition dated Jan 10 for an additional EGM are in its letter to HSBC Trustee; HSBC Trustee has asked Quarz Capital Asia to withdraw some of the resolutions and for clarification on some others in the Jan 10 requisition.
Even more extraordinary, is a sentence that can be interpreted as Quarz Capital Asia’s legal counsel agreeing with HSBC Trustee. “The Trustee notes the view expressed by Providence Law Asia, legal counsel acting for Quarz, at the case conference for the Order 32 Application held on 23 January 2024, that the Trustee's power under Clause 28.2.1 of the Trust Deed is in the nature of a discretion and not an obligation. The Trustee would like to understand how this position can be reconciled with Resolution 8, which seeks to direct the Trustee to provide a certification in respect of the Proposed Trust Deed Amendments pursuant to Clause 28.2.1 of the Trust Deed, having regard to the general principle under the Trust Deed (e.g. Clause 2.9.2) and general law that Unitholders cannot seek to control the exercise of the Trustee's discretion.”
Evident too, is that Quarz Capital Asia has been advocating against ESR Group and its concert parties voting in an EGM on extraordinary resolutions to change the Trust Deed to enable the passive REIT to hold an operating company.
On Aug 7, 2023, based on an EGM requisitioned by Quarz Capital Asia, resolution 1 to remove the external manager was voted through, with 57.46% of unitholders voting for the resolution, according to announcements on SGXnet. Resolution 1 was: “That Sabana Real Estate Investment Management Pte. Ltd. be removed as the manager of Sabana Industrial REIT as soon as practicable after this resolution is passed.”
In the rationale for Resolution 3 of the Jan 10 requisition (to purchase the existing external manager), Quarz Capital Asia says in its Jan 29 letter: “If a transaction to purchase the existing Manager for not more than S$10,000,000 can be completed, the existing Manager will become the new Internal Manager. The transaction should include definitive terms that ensures that the seller is supportive of Internalization.”
Resolution 12 of the Jan 10 requisition says the Trustee “to immediately seek written confirmation and guidance from the Monetary Authority of Singapore and the SGX RegCo on whether the Manager and its shareholders and related parties are permitted to vote” to amend the Trust Deed. The Trustee has requested Quarz Capital Asia to withdraw this resolution.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
In reply to Quarz Capital Asia’s Jan 29 letter, the Trustee says it disagrees with any suggestion of wrongdoing or delay on its part. The Trustee also reiterates its “preliminary views originally shared with Unitholders on 9 January 2024 that convening an EGM to consider the proposed resolutions at this juncture would not be beneficial to unitholders as a whole”.
The Trustee adds it “would like to clarify that it respects that Unitholders are rightfully entitled to requisition meetings in accordance with the provisions of the Trust Deed. Rather, the Trustee's concern is that it is still unclear how the requisitioned resolutions are to be implemented and it would not be beneficial to the progress of the internalisation for the Requisitioned Resolutions, as currently worded to be tabled to Unitholders at this juncture.”
