Rescue package for MI-REIT approved by shareholders
By Ryan Huang, Channel NewsAsia | Posted: 23 November 2009 2324 hrs

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SINGAPORE: Unit holders of MacarthurCook Industrial Trust (MI-REIT) have approved its recapitalisation plans after a tense extraordinary general meeting (EGM) that saw heated exchanges on Monday.

Crowds started queuing up an hour early to get into MI-REIT's EGM.

Top of their minds were five resolutions which, if passed, will allow the trust to raise some S$217 million through a rights issue to refinance its existing debt and buy properties in Singapore.

Failing which, MI-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 unit holders were also reportedly unhappy with the resolutions.

"The dilution is too much and then it is very unfair to give outsiders a discount of 32 per cent for this rights issue," said Ang Kong Meng, a retail investor with MI-REIT. "This rights issue, this placement should not be given to outsiders in such a manner.

"In fact, what the REIT can do is not to proceed with the purchase of the property, and proceed with the sales of assets, some assets may be worth about S$100 million."

MI-REIT had proposed to issue 975.6 million rights and 221 million shares to a group of investors led by Australia's AMP, but at a 32-per-cent discount from its traded price before the announcement.

MI-REIT had said its proposal was the only feasible solution. It expects any dilution of value to be only 12 per cent, translating to a drop in value of 4.6 cents.

Some investors, however, believed that allowing the recapitalisation will help save their investments. Clarence Ho, another retail investor, said: "They would not have lost, I did my calculation, so I am very eager to make sure this resolution goes through."

There were also tense moments during the meeting, as accountants were called in to placate demands for a vote recount. In the end, the resolutions stood.

CIT, which tried to scuttle the deal, was in no mood to comment.

Earlier, CIT had also tried to gain control of MI REIT's management and take charge of its assets. But its plan was shot down by the Monetary Authority of Singapore, which said that CIT could not be appointed as the manager of MI-REIT because of potential conflicts of interest.

With the resolutions passed, MI-REIT will be issuing its placement units to cornerstone investors on Tuesday.

The counter last closed at 35 cents.

- CNA/yb