FCOT – BT

FCOT gets nod for rights, property buy

ALL resolutions at Frasers Commercial Trust’s (FCOT) extraordinary general meeting, including its proposal to raise $214 million in a three-for-one rights issue and the acquisition of a property from its sponsor for $342.5 million, were passed by unitholders yesterday.

This confirms the $675 million in loans which FCOT earlier said it had secured from a consortium of lenders, on the condition that shareholders approved its proposed recapitalisation exercise.

The new loans, and proceeds from the rights issue, will be used to refinance a significant portion of FCOT’s existing debt, including all debt maturing this year, FCOT said in its June 30 announcement of proposed recapitalisation measures.

The rights issue had been widely expected as the trust’s gearing had risen to 58 per cent at the end of Q1 2009. The real estate investment trust (Reit) had gross borrowings of $945.5 million as at March 31, $624.5 million of which will mature in the second half of this year.

Showing its support, FCOT’s sponsor Frasers Centrepoint Limited (FCL), which has a deemed stake of 22.2 per cent in FCOT now, said that it would take up its entire pro rata entitlement of the rights units and is willing to subscribe for up to 32.7 per cent of all of FCOT’s rights units.

Unitholders’ approval yesterday confirmed that FCOT would buy Alexandra Technopark from FCL and pay for it by issuing convertible perpetual preferred units entitling FCL to a distribution of 5.5 per cent a year. FCL will also undertake the master lease for the property for five years, giving FCOT an annual rent guarantee of $22 million.

At the EGM, the shareholders also approved an amendment to expand FCOT’s current investment policy, allowing it to invest in real estate assets located in the Asia-Pacific region used for commercial purposes.