SIAS - First REIT Virtual Dialogue Session was conducted on 7th Jan 5pm.
3 main issues:
- First Reit foresee that Lippo Karawaci (LK) will default as LK have been in negative cashflow since 2015 [LK contribute 72.1% of rental income]
- Unable to refinance as Bank are not lending due to concerns over LK (Deal breaker)
- Soon to expire of 5 Master lease by end 2021
Legal procedure option will be lengthy (Time), Costly and Complicated.
Divestment option will not be ideal as bid price received will not be attractive due to COVID.
New operator option is not ideal as existing infrastructure might not suit new operator
Rights is urgently needed, else LK will have a vey high chance of default.
If approval was not obtained during EGM (to be held on 18 Jan Mon):
There is no Plan B
Post rights (If approved during EGM):
Gearing will drop to 34%
No loan repayment in 2021
OUE Limited might have a near 60% ownership if assuming they take up all the unsubscribed rights, thus resolution 2 is needed for.
Restructure, Recapitalization and Reposition to become FIRST REIT 2.0
FIRST REIT 1.0 (Current) --------------------------> FIRST REIT 2.0 (Post rights)
Concentrated risk Diversify
Potential default Avoid default
WALE 7.4 years WALE 12.6 years
Lack of confidence from shareholders Instill shareholders confidence