EC World REIT has received permission from lenders to delay paying off $114 million in debt that came due on 31 December, contingent on the Singapore-listed trust making a partial repayment and completing a planned divestment of two mainland China warehouses.
The lenders have extended the mandatory repayment deadline to 28 February on the stipulation that the REIT’s sponsor, Shanghai-based industrial conglomerate Forchn Holdings Group, pay S$4.4 million ($3.3 million) to the lenders by 6 January, the trust’s manager said last Friday in a filing with the Singapore Exchange.
EC World REIT, which owns seven logistics facilities in Hangzhou and one asset in Wuhan worth a combined RMB 8.1 billion ($1.2 billion), intends to fund the mandatory repayment amount through the sale of two logistics assets in Hangzhou to Forchn Holdings.
“The manager wishes to update that completion of the proposed divestment has not yet taken place, and the parties currently expect completion to take place by 31 January 2023 (or such other date as may be agreed among the parties),” said Goh Toh Sim, executive director and CEO of the trust’s manager.
After notifying the SGX on 26 December of a plan under which its sponsor would shoulder a portion of the loan due on 31 December, a margin deposit of RMB 200 million was paid by Forchn Holdings into an escrow account on 30 December.
The S$4.4 million partial repayment will be funded by distributions made by EC World REIT to Forchn Global Pte Ltd in the latter’s capacity as a unitholder of the trust in respect of the financial period from 1 July 2022 to 30 September 2022, the manager said.
The remaining amount of S$138.2 million will be due on the last day of February. According to the manager, most of the lenders have obtained internal approvals for the repayment plan, while the rest are in the process of obtaining approvals.
The manager said there had been no indication from the remaining lenders that they would call for an event of default.
Still Up in the Air
In October, two wholly owned subsidiaries of Forchn agreed to acquire the first phase of the Bei Gang Logistics complex in Chongxian New City, north of Hangzhou, for RMB 1.2 billion, as well as the neighbouring Chongxian Port Logistics facility for RMB 820 million.
Proceeds from the sale would have raised an amount sufficient to allow for repayment of the EC World REIT’s obligations, but Forchn failed to secure financing for the acquisition.
Under a restructuring plan approved last June, repayment of the trust’s nearly $310 million in offshore debt and onshore loans worth RMB 1.02 billion had been extended by 10 months to April 2023, on the condition that a quarter of the outstanding debt be repaid before the end of 2022.
A failure to extend the debt repayment plan by year-end would have put the trust into default, triggering mandatory repayment of its entire offshore debt and eventually resulting in cross defaults on its onshore obligations, as well as on revolving loan facilities totalling S$98 million.