SINGAPORE – ESR Group, the sponsor of Sabana Industrial Real Estate Investment Trust (Sabana Reit), has filed a court application to prevent activist investor Quarz Capital from convening an upcoming extraordinary general meeting (EGM), said the Reit’s manager in a bourse filing late on Friday.
Quarz had requisitioned the EGM, which was slated to take place on Aug 4, to vote on two resolutions.
The first would be for the removal of Reit manager Sabana Real Estate Investment Management (SREIM), while the second concerns the internalisation of the Reit management function of Sabana Reit.
According to the bourse filing, ESR – which is also the owner of SREIM – has filed an originating application to the High Court that the EGM requisitioned by Quarz to vote on the two proposed resolutions is “invalid and/or ineffectual”.
This is on the grounds, first, that the second resolution being proposed as an ordinary resolution is “in breach of the trust deed constituting the Sabana Reit”, the Reit manager said.
Second, the first resolution is “being proposed as a stand-alone resolution and not contingent on the passing of Resolution 2”, and “does not accord with the requisition, which is for the purpose of internalisation of Sabana Reit”. Third, the requisition “contains false and/or misleading statements”, the manager added.
No date has been scheduled yet for the hearing of the originating application.
ESR has also filed an interim injunction application to the High Court to restrain the manager from taking any steps to convene an EGM, pending the final determination of the originating application. The interim injunction application is scheduled for hearing before the High Court on Tuesday.
ESR said on Saturday it has made known publicly how “gravely concerned” it is by the requisition.
“However, it would not be constructive for there to be protracted public discourse over this present dispute, which has also allowed for the continued perpetuation of the false and misleading statements by Quarz,” ESR said.
It added that it has been compelled to commence court proceedings “to seek a swift and decisive determination” as the Reit manager “has not taken a conclusive position on the dispute”.
“We have taken these steps so that clarity can be provided to unit holders and to ensure the proper processes are followed in line with unit holders’ expectations and the terms of the trust deed. All unit holders must be placed in a position to make a considered and informed decision based on true and accurate facts,” the group said, adding that it cannot provide any further comments as this is an ongoing legal matter.
In response to ESR’s court application filing, a Quarz spokesman said it has received an “overwhelming show of support” from unit holders on the EGM requisition.
It encouraged all unit holders “to stand together in this effort to uphold the principles of fairness, transparency and good corporate governance”.
“The rights of unit holders to remove a manager by a simple majority vote is the fundamental key pillar of investor protection in Singapore. This is now being challenged,” the spokesman said.
“The meeting we have requisitioned is an expression of this right, and we view any attempt to derail this process as a betrayal of the trust that the unit holders have placed in the management of the Reit.”
The spokesman noted that it would send a “chilling signal with lasting negative consequences to the local and global investment community that there is essentially no accountability, recourse and protection for investors in the Singapore Reit sector” – and that whatever the external manager does, it “can never be removed”.
Quarz hopes that the situation will be resolved “amicably and swiftly”, and called on ESR to “engage in constructive dialogue”, rather than in litigation.
Sabana Reit’s units last traded at 42.5 cents on Friday at noon before the Reit requested a trading halt. THE BUSINESS TIMES
