SINGAPORE - Vibrant Group, through its various units, will be disposing its stake in the vehicle that owns the manager of Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit), and units in the Reit for around $62.2 million in net proceeds.
The deal will be executed across three different sales and purchase agreements, the logistics player said in a regulatory filing on Wednesday (May 22).
The first agreement involves Vibrant's 51 per cent stake in Sabana Investment Partners (SIP), which will be sold to InfinitySub, a wholly owned subsidiary of E-Shang Infinity, which is indirectly owned by ESR Cayman. The value of the total transaction is $20.5 million, with an adjustment sum of around $1.3 million.
SIP is a special purpose vehicle which wholly owns the Sabana Reit's manager called Sabana Real Estate Investment Management. The rest of SIP's shares is held by Blackwood Investment with a 45 per cent stake, and Atrium Asia Capital Partners which holds a 4 per cent stake.
The second agreement will see Vibrant and its unit - Singapore Enterprises (SEPL) - selling 6.51 per cent of the total units in Sabana Reit, which translates to around 68.6 million units, for around $32.9 million.
Meanwhile, the third agreement will see Vibrant selling 1.48 per cent of Sabana Reit units, which translates to around 15.6 million units, for about $7.5 million.
Sabana Reit has a market capitalisation of $431.76 million as at May 21, 2019, the filing said.
Vibrant said will use the net proceeds to redeploy its capital, reduce debt and focus on its main business of providing integrated logistics solutions and freight and logistics services. This is along with the group's other lines of business in real estate and financial services. It will also allow the group to consolidate its revenue streams.
Net proceeds from the first agreement will be used to conduct a partial redemption of the Series 003 $66 million 7.5 per cent notes due 2020.
Meanwhile, net proceeds from the second and third agreement will be used to repay an existing banking facility Vibrant obtained from United Overseas Bank, reducing its indebtedness in the process.
Despite its 51 per cent stake in SIP, Vibrant has maintained that it is "not involved in the day to day management" of Sabana Reit and its manager, and thus would not be a disposal of its core business - which is providing freight and logistics services and solutions.
The disposal will also not result in a material change to its nature of business, or change its risk profile as it has been consolidating and focusing on developing its freight and logistics business.
As the transactions are of a price-sensitive and time-sensitive nature, which are important considerations to the buyers, Vibrant said an extraordinary general meeting needs to be convened.
"If the group is not able to sell the sale shares and the sale units to InfinitySub and E-Shang Infinity, there is a risk that the group may not be able to obtain a similar commercially favourable offer in the near future," the group added.