CAMBRIDGE Industrial Reit (CIT) sold half of the shares it owned in MacarthurCook Industrial Reit (MI-Reit) last Tuesday, the day after MI-Reit unitholders narrowly approved a controversial rescue plan.
CIT bought 26 million MI-Reit shares at an average of about 40 cents each early last month following news that MI-Reit was issuing new shares at a steep discount to market price and net asset value.
MI-Reit's move to issue new shares was intended to raise funds to meet $315 million in obligations due by the end of the year.
Yesterday, MI-Reit announced that CIT was left with 13.3 million units or 2.73 per cent of total holdings, from 9.76 per cent previously.
The changes were due to sales of about 12.7 million units at an undisclosed price as well as the dilutive effect of the placement exercise carried out last week.
The new units, placed to cornerstone investors, AMP Capital Holdings and present sponsor AIMS Financial Group, severely diluted existing unitholders, including CIT and angered many minority unitholders.
CIT used its units to mount a week-long campaign to get unitholders to reject the refinancing proposal. It wanted unitholders to vote for CIT to manage MI-Reit instead, arguing that it had plans to save costs and secure financing to save the Reit.
But just days before a crucial meeting to vote on the proposal, CIT said the Monetary Authority of Singapore had blocked its plan to manage both Reits due to a possible conflict of interest.
Without a credible alternative, unitholders eventually voted for the recapitalisation proposal in a stormy general meeting last Monday. The meeting also approved a two-for-one rights issue and the purchase of four industrial buildings from new sponsor AMP.
MI-Reit yesterday lodged an offer information statement for the proposed rights issue and said it had completed the purchase of the four buildings from AMP.
This was funded by a bridge loan of $39.6 million from Standard Chartered Bank plus $49.3 million of the gross proceeds of the $62 million raised in the recent share placement exercise
Source: Business Times, 1 Dec 2009
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