Far East Consortium’s acquisition of controlling stake in Eagle Hospitality Trust falls through

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HONG Kong-listed property combination Far East Consortium International (FECIL) won’t continue with the proposed acquisition of a controlling stake in Eagle Hospitality Trust’s (EHT) chief, EHT’s administrator said in an administrative filing late on Thursday.

On June 3, EHT had reported that FECIL had inked a non-binding contingent proposal with Urban Commons. FECIL was to procure 70 percent in both EHT’s Reit chief and its trustee-administrator.

The proposed transaction would have involved FECIL subscribing to one convertible favored share (CPS) in every supervisor. These CPSs would then be changed over to ordinary shares in the managers upon the satisfaction of certain conditions including some relating to the restructuring and recapitalisation of EHT.

There would also be further subscriptions by FECIL of shares in the managers at the hour of the conversion of the CPS such that FECIL will have a 70 percent stake in every one of the managers.Since at that point, in any case, no definitive understanding has been signed in respect of the transaction.EHT’s trustee, DBS Trustee, has now coordinated its financial adviser Moelis and Company to begin a request for proposal (RFP) process “on an assisted basis” from parties interested to go into an arrangement with EHT.

Under the RFP process, interested parties should submit their preliminary indication of interest by July 31. The trustee and Moelis expect that proper bids should be submitted before the finish of August.

Singapore Exchange Regulation (SGX RegCo), the administrative arm of SGX, has necessitated that all bids under the RFP process are to be considered with no restrictions on the qualification of parties to partake.

The controller has also coordinated that Howard Wu and Taylor Woods, in the past non-independent non-official director and representative administrator of EHT’s chief, should not be negotiating with any bidder exclusively.

This is following the discovery of “biased” interested-person transactions in the type of agreements between the team and master lessees involved in the trust’s inn assets.

Mr Wu and Mr Woods, who are also fellow benefactors at Eagle Hospitality Trust’s (EHT) current sponsor Urban Commons, reported their resignations from EHT’s chief shortly after the discovery of the transactions. They continue their roles at Urban Commons.

The transactions were noted to be biased to the interests of EHT and its minority stapled security holders.

EHT has gone under close scrutiny by the authorities, and is as of now the subject of a joint investigation by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force.

The test is regarding suspected breaches of disclosure requirements under Section 203 of the Securities and Futures Act, and stems from a referral by SGX RegCo.

Trading of EHT stapled securities has been suspended since March 24, 2020.

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