Wednesday 30 December 2020

Results of EGM Of Eagle Hospitality Trust- Disastrous EGM and Back To Square One

Well, this is a complete waste of time and efforts for all stakeholders of Eagle Hospitality Trust ("EHT"). All resolutions were defeated by the stapled security holders as Resolution 1 to Resolution 4 are inter-dependent. Stapled security holders neither wanted a new REIT Manager & their rescue plan nor wanted to liquidate the Trust which is already running out of working capital. 88.39% do not want to liquidate the Trust even thought they rejected the rescue plan. However, this brought the Trust closer to creditors' winding up due to funding issue.

On closer examination, resolution 2 on proposed REIT Manager base fee, which required an extraordinary support of 75%, caused the downfall of the entire EGM to appoint the new manager. My thoughts are that unit-holders are not being rational here. EHT is a trust in distress and there is no painless business solution to get out of this mess.  Results of the EGM as below:

Resolution 1 (Ordinary): To approve the proposed appointment of SCCPRE Hospitality REIT Management Pte. Ltd. as the new manager of EH-REIT (Conditional upon Resolution 2, Resolution 3 and Resolution 4)
For-56.64%; Against-43.36%
Results: Carried but since resolution 2 failed, proposed new REIT Manager will not be appointed.

Resolution 2 (Extraordinary-need 75% to pass): To approve the Proposed Base Fee Supplement (EH-REIT) to reflect the proposed base fee structure of the New REIT Manager as an Interested Person Transaction (Conditional upon Resolution 1, Resolution 3 and Resolution 4).
For-56.25%; Against- 43.75%
Results: Defeated as unable to get 75% support. Proposed new REIT Manager will not be appointed

Resolution 3 (Ordinary): To approve the proposed appointment of SCCPRE Hospitality Business Trust Management Pte. Ltd. as the new trustee manager of EH-BT and waiver of the 14-days’ notice period required under Regulation 14(3)(b) of the BTR (Conditional upon Resolution 1, Resolution 2 and Resolution 4).
For-56.63%; Against- 43.37%
Results: Carried but since resolution 2 failed, proposed new REIT Manager will not be appointed.

Resolution 4 (Ordinary):  To approve the proposed authority for the issuance of up to 140,000,000 new Stapled Securities at the Issue Price per Stapled Security for payment of the New Managers’ Base Fees for the financial years ending 31 December 2021 and 2022 (Conditional upon Resolution 1, Resolution 2 and Resolution 3).
For-56.21%; Against- 43.79%
Results: Carried but since resolution 2 failed, proposed new REIT Manager will not be appointed.

Resolution 5 (Extraordinary-need 75% to pass): To approve the proposed (a) voluntary delisting of EHT, (b) voluntary termination and winding-up of EH-REIT, and (c) voluntary winding-up of EH-BT, in the event that any of Resolution 1, Resolution 2, Resolution 3 and Resolution 4 is not passed and/or carried.
For-11.61%; Against-88.39%
Results: Defeated

Parting Thoughts:
Stapled security owners are just digging their own grave by delaying the appointment of a new REIT manager to open up the hotels for business. A forced liquidation by the bankers may well be on the table soon despite a massive 88.39% of stapled security holders who want EHT to continue operations instead of choosing a voluntary winding up. The saga continues for now.....

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