Soilbuild Reit hearing adjourned to March 30 after objection from unitholder

SINGAPORE (THE BUSINESS TIMES) - The court hearing on the application to sanction Soilbuild Business Space Reit's (Soilbuild Reit) trust scheme of arrangement has been adjourned to March 30, 9am.

This came after a Soilbuild Reit unitholder opposed the trust scheme sanction application on the ground that the "one-proxy rule", which allows for the appointment of only one proxy per unitholder, should not have been used for the trust scheme meeting.

The Business Times understands that lawyer Florian Leber had filed an objection to the scheme.

The trust scheme of arrangement involves the proposed acquisition of the Reit's units by an entity indirectly owned by Soilbuild Group executive chairman Lim Chap Huat and Blackstone Real Estate.

On March 11, Soilbuild Reit unitholders voted in favour of the proposed privatisation offer by Mr Lim and Blackstone. In an extraordinary general meeting, unitholders representing some 648.5 million units, or 91.94 per cent, voted in favour of the trust deed amendments related to the proposed privatisation. Unitholders representing some 56.8 million units, or 8.06 per cent, voted against the resolution.

They made an offer to take the Reit private with a scheme consideration of $0.55 per unit in December 2020.

Court approval is the remaining condition for the trust scheme to become effective.

On Thursday, the court adjourned the hearing for the application to March 30 for the Reit manager to compile and provide further information to the court.

The one-proxy approach has come under the spotlight in recent months over concerns that not all unitholder voices are accurately represented. This was prevalent in the case of Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) and ESR-Reit's proposed merger.

Fund managers Quarz Capital and Black Crane Capital, who claimed to represent 11 per cent of Sabana unitholders at the time, voiced concerns over the "one-proxy rule" for custodians or nominee companies. They worry that custodians will be unable to reflect all unitholders' votes on the proposed merger.

At present, Singapore's regulatory regime requires that a scheme of arrangement must cross two thresholds. It must be approved by creditors or shareholders representing three-fourths in value of those voting at a scheme meeting. And it must also be approved by a simple majority, in number, of the scheme company's creditors or shareholders present or voting at the meeting - the so-called headcount test.

In theory, the headcount test protects minority shareholders from being easily outvoted by those with large holdings. In practice, and particularly in the present environment, it can distort the outcome of a vote.

Soilbuild Reit units were trading flat at 53.5 cents as at 9.43am on Friday.