On 23 July 2020, Eagle Hospitality Trust ("EHT") finally posted an update on the restructuring status. Far East Consortium International Limted ("FECIL") apparently walked out of their due diligence exercise without making any offer. It was a waste of a good 4 months by granting exclusive rights to FECIL. This exclusive negotiation agreement just expired on 14 July 2020. The previous non-executive directors Howard Wu and Taylor Woods had thus made another detrimental decision against the interest of unit-holders by choosing to enter into an exclusive negotiation deal with only one sole interested party. They should have opened it up to a general public offer for proposal by interested parties from the onset.
1. SGX stepped in with new guidance after the failed negotiation with FECIL that leads to no deal even after 4 months.
A request for proposal has been sent out to invite interested parties to submit their preliminary indication of interest by 31 July 2020 and formal bids by end of August 2020.
SGX has also instructed the management of EHT that (i) there should not be any restriction imposed on bidders eligible to take part and (ii) that Howard Wu and Taylor Woods be barred from any further direct negotiation with any bidders or granting any special exclusive agreement.
2. By end of August 2020, the tender will close
Since formal bids will be submitted by end of August 2020, I anticipated that the earliest award will be end of September 2020. November 2020 will probably be the earliest that all operations can resume after the necessary capital injection and ironing out of key issues by the new interested party.
3. MAS and CAD Investigation on Directors and formal officers of EHT
Still no results out from MAS or CAD of the Singapore Police Force. I am surprised by the audacity committed by Howard Wu and Taylor Woods. Personally, I hope they will face charges for breach of law by the authorities as well as an eventual personal lawsuit against this pair of directors by the Company for the transfer of liabilities from tenant to EHT via non-disturbance agreements.
Summary
While it is indeed disappointing that FECIL chose to walk away, I opt to be more optimistic. I would actually prefer to examine a wide variety of proposals out there that may be better than what FECIL had to offer. Also, if we are lucky, there may even be successful development of a COVID-19 vaccine in the USA in late 2020. This should start the recovery of hospitality assets.
Please also see my previous posts:
I am not surprised by the outcome. The 2 guys keep doing things that hurt unit holders from day one. I was suspecting they have more things hidden and try to strike a deal on their own to conceal it. They should have been arrested. Now 4 precious months wasted. What can unitholders do?
ReplyDeleteNo more trust on SGX IPO.
Hi Henry, no worries. I think Karma will come back for Howard Wu and Taylor Woods.
DeleteAt least, there is now a chance to get back each unit at US$0.137 or more...rather than totally zero residual.