The sole shareholder of Eagle Hospitality Real Estate Investment Trust (EH-REIT) Management Pte Ltd, namely Mandarin West Holdings (MWH), has filed an appeal to Finance Minister Heng Swee Keat on 10 December in respect of the directive on its removal, said MWH on Thursday (17 December).
MWH said in a statement that the Monetary Authority of Singapore’s (MAS) directive – issued on 30 November – had instructed the trustee of EH-REIT to remove the REIT Manager within one month from the date the directive was issued, or such longer period that MAS may approve in writing.
It added that MAS had also requested for an appointment of a new manager for EH-REIT.
“Upon taking professional advice, MWH’s position is that there are meritorious grounds of appeal with reasonable chances of success,” said MWH.
“Accordingly, the appeal against the MAS directive has been lodged with the Minister under the SFA. MWH stressed the fact that it has injected millions of dollars of additional cash into REIT compared to the income generated by its properties over the same time-period,” it added.
MAS’ directive came after it issued a notice of intention on 26 October for the removal of EH-REIT’s manager, as reported by The Straits Times.
This was regarding numerous breaches of the Securities and Futures Act (SFA) by the current manager – EH-REIT Management – and the concerns over the manager’s ability to comply with rules and regulations.
Howard Wu, former chairman of the REIT Manager, said that it is the unit security holders who will “likely suffer at the lack of options they have been provided”, with liquidation being “an absolute last resort”.
“We have not been allowed to implement our strategy – including raising capital – which would, in turn, save the REIT and preserve unit security holders’ value. The significant distress to unit security holders’ needs to cease, and we believe we are in the best position to relieve it.
“Therefore, we are left with no choice but to explore several avenues including appealing to the MAS to reconsider its decision regarding the removal of the REIT Manager,” said Mr Wu.
Directors of Eagle Hospitality Trust arrested over alleged failures to make disclosures to investors
Eagle Hospitality Trust (EHT) is composed of a stapled group of EH-REIT and Eagle Hospitality Business Trust (EH-BT), which has reportedly defaulted on a $341 million loan facility in March.
Mingtiandi reported that the trust’s manager had served “pay/perform or quit” statutory notices to defaulting master lessees on 16 September, which require them to either pay overdue rent or meet other obligations or surrender the properties they hold in the trust.
Subsequently, on 23 September, the trust’s manager seized all 18 hotels in the trust and issued termination notices to the master lessees, in which the termination took effect just 10 days later.
Only three of the 18 hotels have remained in operation. With the seizure of the hotels, the trust’s manager was given direct control over EHT’s assets.
On October, Eagle Hospitality Trust (EHT) stated that six current and former directors of the company were arrested as part of the authorities’ investigation into its failures to make necessary disclosures to investors.
The directors – including Lau Chun Wah, Kelvin Tan Wee Peng, Tarun Kataria, Salvatore G Takoushian, Carl Gabriel Florian Stubbe and Ng Kheng Choo – have since been released on bail.
In a statement to the Singapore Exchange (SGX), the trust’s manager noted that “none of the aforementioned individuals have been charged for any offence nor do the arrests necessarily signify that there will be charges.”
“The managers and their directors continue to cooperate fully with the authorities on the investigation and are unable to provide further details at this time,” it stated.
Meanwhile, Mingtiandi’s report also highlighted that the trust’s manager did not make any changes to the directors on the board representing unit-holders of the two stapled-securities that compose EHT, since Carl Gabriel Florian Stubbe was removed on 30 August.