SINGAPORE (THE BUSINESS TIMES) - The managers of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) are now offering MNACT unit holders the option to receive the entire scheme consideration of their proposed merger, of $1.1949 per unit, wholly in cash.
MCT will also make a preferential offering of $2.0039 per unit to fund the additional cash of up to $2.2 billion required in the new cash-only option.
MNACT and MCT had in December proposed a merger of both real estate investment trusts (Reits), a move that has been criticised by unit holders on both sides and questioned by the Securities Investors Association (Singapore), or Sias.
Previously, the proposed trust scheme would see MNACT unit holders receive a scheme consideration of $1.1949 for each MNACT unit held - either in the form of 0.5963 new MCT units at an issue price of $2.0039 each, or a combination of 0.5009 consideration units and $0.1912 in cash.
The new cash-only consideration will provide MNACT unit holders with "greater flexibility to elect the form of scheme consideration that is most suited to their investment needs", the managers said in a joint statement on Monday (March 21).
The value of the scheme consideration remains unchanged at $1.1949 per MNACT unit.
The managers noted that the decision to include the cash-only consideration came after a request from the MNACT manager amid prevailing market conditions and feedback from MNACT unit holders.
To fund the additional cash requirement of up to $2.2 billion, MCT will make a preferential offering of up to 1.09 billion units at $2.0039 each, which is the same as the scheme issue price of each consideration unit, to its unit holders.
The offer price represents a 6.3 per cent premium to the volume weighted average price of $1.8843 per MCT unit for all trades done on March 18, being the preceding market day up to the offer announcement.
Mapletree Investments, the sponsor of both MCT and MNACT, has provided an undertaking to subscribe up to $2.2 billion in the preferential offering at the issue price.
It also agreed to a six-month lock-up of its unit holdings in the merged entity upon the completion of the trust scheme or the preferential offering, whichever is earlier, on top of its earlier undertaking to fully receive the scrip-only consideration.
The funds raised are in addition to the $417.3 million to be funded through the issuance of perpetual securities and/or debt funding, required under the original terms of the trust scheme.
The managers noted that the preferential offering will not be undertaken if all MNACT unit holders choose to receive either the scrip-only consideration or the cash-and-scrip consideration.
In the revised trust scheme, the cash-only consideration will be the default form of the scheme consideration, the managers said.
In February, Sias questioned the managers as to why the proposed merger was necessary given that there are "no apparent operational synergies" between them. MCT's manager said the merger was to bring about long-term sustainable growth for MCT.
Last week, activist fund manager Quarz Capital Management also requested that the Monetary Authority of Singapore ensure the manager of MNACT fulfils its fiduciary duty to its unit holders as it thinks the deal undervalues MNACT's assets.
Last Friday, units of MCT closed up one cent or 0.5 per cent at $1.89, while units of MNACT closed flat at $1.12.
