The unit price of Singapore-listed First REIT finished the trading day about 35% lower from its previous close, on the news that it would be conducting a 98-for-100 rights issue.
First REIT announced on 28 December that it has proposed to issue approximately 791,063,000 rights units to raise approximately SGD158.2 million (USD119 million).
This is equivalent to approximately 98% of the 807,206,351 units in issue as at 23 December 2020.
The units will be issued at SGD0.20 per unit, which results in an indicative theoretical ex-rights price (TERP) of approximately SGD0.23.
The rights issue is critical for First REIT to meet its debt covenants and avoid an imminent default of 39.8% of total debt due on 1 March 2021, said the REIT.
In support of First REIT and the proposed rights issue, the REIT’s manager and its co-sponsor, OUE Lippo Healthcare Limited (OUELH), will subscribe and pay in full for its respective total provisional allotments.
Besides the rights issue, First REIT will also be re-structuring all of the hospitals which First REIT had leased to either PT Lippo Karawaci Tbk, and certain subsidiaries of PT Siloam International Hospitals Tbk.
First REIT’s announcement can be accessed here.
First REIT was last done on the SGX at SGD0.265, which implies a distribution yield of 15.2% according to data on the Singapore REITs table, before taking into account any impact from the impending lease restructurings.