The manager of LMIRT says it has opted not to pay distributions on the $120 million 6.6% perpetual securities issued by Perpetual Asia, LMIRT’s trustee.
The distributions were scheduled to be paid on Dec 19.
Perpetual Asia has no obligation to pay the Dec 2020 distribution. The unpaid distribution is non-cumulative and does not accrue distribution.
The move comes as LMIRT is not allowed to make any distributions unless its aggregate leverage is below the Monetary Authority of Singapore’s (MAS) gearing limit of 50%, and the aggregate of distributable in income less any distributions made to holders of perpetual securities and unitholders since the issuance of the US$ notes is greater than zero.
Should there be zero distributable income, LMIRT is permitted to make distributions of up to US$5 million.
This was disclosed in LMIRT’s 3QFY2020 results announcement on Nov 2 under the US$250 million ($334.1 million) guaranteed senior notes with a 7.25% p.a. coupon issued by its wholly-owned subsidiary LMIRT Capital in June 2019 and due 2024,
SEE: Moody’s places Lippo Malls Indonesia Retail Trust’s ratings on review for downgrade
As at Sept 30, LMIRT’s aggregate distributable income is zero, and the US$5 million limit has been fully utilised. Some $4.9 million of distributions on perpetual securities were distributed in September 2020 and $2.0 million in dividends were declared to unitholders for 3QFY2020.
As a result of the exercise, the dividend stopper provisions under the perpetual securities are applicable.
Under the terms, the issuer shall not declare or pay any dividends or distributions and that no dividend or distribution is made on the units or the $140 million 7% perpetual securities issued on Sept 27, 2016.
The issuer will not redeem, reduce, cancel, buy-back or acquire any of the units as well as any of the 2016 perpetual securities.
This is unless the outstanding perpetual securities have been fully redeemed, the next scheduled distribution has been paid in full, or an optional distribution has been paid in full.
Units in LMIRT closed flat at 8.4 cents on Dec 14.
