MI-REIT – TODAY
Recapitalisation plan approved
Approval came after gruelling face-off between unitholders and company managers
After a gruelling three-and-a-half-hour long meeting, unitholders of MacarthurCook Industrial (MI) Reit eventually approved the controversial plan to raise $217.1 million needed to recapitalise the Reit yesterday.
However, this came amid a heated exchange that took place between disgruntled unitholders and managers of MI Reit at an extraordinary general meeting (EGM) at Marina Mandarin Hotel. The tense exchanges also reached a point when unitholders even demanded a vote recount.
MI Reit unitholders queued up 30 minutes in advance to get into the EGM, and top on their minds were five resolutions which would allow the trust to raise $217.1 million to refinance its existing debt and buy properties in Singapore.
Failing which, the Reit was at risk of being liquidated when its debt obligations mature at the end of the year.
Controversy erupted last week, when Cambridge Industrial Trust (CIT) – which controls nearly 10 per cent of MI Reit – said it would block the recapitalisation plan.
Some unitholders were also not happy with MI Reit’s plan to raise capital through the issuance of new units to certain institutional investors which, at 28 cents a piece, represent a hefty 70.2-per-cent discount to the Reit’s net asset value of 94 cents.
The investors for the recapitalisation plan are AMP Capital Holdings, present sponsor AIMS Financial Group and other “cornerstone” investors.
It was a full house at the EGM with more than 250 investors present.
MI Reit’s chief executive Nick McGrath started the session with a 40 minute-long presentation to convince unitholders that the management’s plans are in their best interest and the only way to save the Reit.
Still, more than six unitholders stood up and mainly lambasted the board for its failure to secure a less dilutive deal for unitholders.
Investors were also not happy with MI Reit’s agreement to purchase properties from AMP, which are priced at “full market valuation”. One unitholder described this as a case of “left pocket putting in money and right pocket taking out more money from us”.
Others wanted to know why the management could not arrange for a more orderly sale of its assets since June to fund its debts, when the property market was already improving and the Reit had also secured a six-month extension for its debts then.
In defence, Mr McGrath told the media later that the Reit did continue to evaluate on the sale of its assets after June but any proceeds will be used to repay its debts of $226 million and there was still the question of its $90 million property at International Business Park that needed funding.
“An equity recapitalisation is critical to the survival of this trust,” he said.
Mr McGrath also noted that property purchases from AMP were part of a “complete suite of transactions”.
CIT chief executive Chris Calvert, who had launched an offensive against MI Reit’s recapitalisation plans since last Monday, was also present at the EGM.
In the end, unitholders voted narrowly in favour for the Reit and out of the five resolutions, two were won by a hair’s breadth.
The two resolutions, which garnered only 52.3 per cent and 52.6 per cent of total unitholder votes cast, were for the investment by AIMS and to buy properties from AMP for $68.6 million.