The proposed rights issue is critical for First REIT to meet its debt covenants.
First Real Estate Investment Trust (REIT) has released its plans to restructure, recapitalise, and reposition for the future in its circular to unitholders.
The transaction involves a restructuring of master lease agreements (MLAs) of Indonesian hospital assets and a proposed rights issue, indicative of a 20 Singapore cents per unit issue price, to raise gross proceeds of $158.2m.
Restructuring of the MLAs of Indonesian hospital assets are necessary to enable the manager to proceed with the proposed rights issue, which is in turn critical for First REIT to meet its debt covenants and avoid an imminent default of 39.8% total debt, due on 1 March.
If the proposed rights issue does not proceed, First REIT will be faced with a critical need to re-evaluate other funding options to avoid going into financing default.
“Along with the recapitalisation of First REIT through the rights issue, the proposed LPKR MLA restructuring will allow First REIT to emerge from its current challenges and provide the foundations for First REIT to be repositioned and focused on delivering long-term returns for unitholders moving forward,” CEO Victor Tan said.
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